'Can stand out in this turbulence': Uday Kotak is confident about India amidst global turmoil

Amidst global turmoil in the financial markets since the collapse of Silicon Valley Bank (SVB), and fresh trouble at Credit Suisse, billionaire Uday Kotak said that India can stand strong in this turmoil if it navigates well.

He said that India has been keeping its target so far, mentioning that the current account deficit looks below 2.5 per cent FY23, and going below 2 per cent in FY24. Lower oil helps, he said.

Kotak's comments came on the back of a looming banking and financial crisis in the US and Europe, following the collapse of three regilnal banks, and fresh troubles for global banking major Credit Suisse.

“Even as the global turmoil continues in financial markets, the macro factors are turning better for India. Current account deficit looks below 2.5 per cent Fy 23, and going below 2 per cent in Fy 24. Lower oil helps. If we walk our talk and navigate well, India can stand out in this turbulence," Kotak said on Thursday.

India’s current account deficit (CAD) has widened to a nine-year high of 4.4 per cent of GDP in the second quarter on account of higher trade deficit, reflecting the impact of slowing global demand on exports. The country recorded a CAD of 3.3 per cent of GDP in the first half of the current fiscal.

India’s goods exports have gone down 8.8 per cent in February to $33.9 billion due to global stress, while imports fell 8.2 per cent from a year ago to $51.31 billion, according to Commerce Ministry data released on Wednesday. This is the third time in five months that merchandise exports have contracted, following an 11.6 per cent drop in October 2022 and a 3 per cent fall in December 2022.

During April-February this fiscal, however, the country's overall merchandise exports rose by 7.5 per cent to $405.94 billion, imports in this period increased by 18.82 per cent to $653.47 billion.

While the figures for February indicate a moderation in the trade deficit, the overall trend for the current fiscal year is a cause for concern.

The data shows that the trade deficit for merchandise goods has risen by 43 per cent to $248 billion for April-February of the current fiscal year, up from $173 billion in the same period last year. This particularly means that the value of imports has gone up in the areas of petroleum, gold, and electronics.

The trade deficit has been a critical concern for the Narendra Modi-led government as it directly impacts the country's foreign exchange reserves. It can further push the current account deficit higher.

The government has been taking measures to address the trade deficit, such as promoting exports, reducing import dependency, and increasing domestic production.

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