Current Account Deficit (CAD)

The Current Account Deficit (CAD) arises when the value of a country's imports of goods, services, and income transfers exceeds the value of its exports over a given period. For India, the current account is heavily influenced by the trade balance in goods (particularly crude oil and gold imports), software and IT services exports, and remittances from the Indian diaspora abroad. A widening CAD puts downward pressure on the Indian Rupee, as it implies higher demand for foreign currency to pay for excess imports. It also makes India more dependent on capital inflows (FII investments, FDI, external borrowings) to finance the deficit. SEBI-registered analysts and macro investors closely track CAD data as a key indicator of India's external sector health and Rupee vulnerability.