Current account deficit or CAD, is an assessment of a country's foreign trade, in which the value of goods and services imported is greater than the value of goods and services exported. Current account represents a country's foreign transactions. Current account includes net income like interest, returns including dividends and so on, and net transfers including foreign aid extended.
CAD represents negative foreign sales of a country. If the current account balance is less than zero, then it is said to be in deficit, if not, it is in surplus. Developed countries like United States usually run current account deficits, while emerging countries often run current account surpluses. China has a trade surplus with the USA.
SEE ALSO: How To Check Credit Score?
India traditionally has current account deficit, as the value of its imports is way higher than the value of its exports. India mainly imports crude oil from gulf countries. India is one of the top 5 crude oil importers. Gold is another commodity that is imported in a large quantity.
India mainly exports gems, mineral fuels, machinery and organic chemicals. The Indian export business is not something to boast of. The Indian export base is facing stiff competition from Chinese counterparts who outplay Indian products when it comes to pricing. India is improving trade relations with its neighboring countries to promote exports.
India mainly exports its products to USA, gulf countries and UK. Indian products are not getting bigger market share in foreign countries due to their internal policies which is curbing down globalization and stressing on promoting domestic goods and services over foreign goods and services.
Want to know more on Investment Planning? We at IndianMoney.com will make it easy for you. Just give us a missed call on 022 6181 6111 to explore our unique Free Advisory Service. IndianMoney.com is not a seller of any financial products. We only provide FREE financial advice/education to ensure that you are not misguided while buying any kind of financial products
SEE ALSO: How To Check Credit Score For Free?
SEE ALSO: What is Interest Rate?
Trade balance is either surplus or deficit of a country that runs on exports and imports of goods and services with rest of the world.
Current account balance is the sum of trade balance and surplus or deficit of a country that runs on investment income from rest of the world.
Any surplus or deficit on the current account is matched by an equal and opposite balance on the capital account, reflecting an increase in net claims on the rest of the world for a country with a current account surplus or a decrease in net claims on the rest of the world for a country with a current account deficit.
You May Also Watch:
Keep your Financial Cognizance up to date with IndianMoney App. Download NOW for simple tips & solutions for your financial wellbeing.
Have a complaint against any company? IndianMoney.com's complaint portal Iamcheated.com can help you resolve the issue. Just visit IamCheated.com and lodge your complaint. If you want to post a review on any company you can post it on Indianmoney.com review and complaint portal IamCheated.com.
Be Wise, Get Rich.
This is to inform that Suvision Holdings Pvt Ltd ("IndianMoney.com") do not charge any fees/security deposit/advances towards outsourcing any of its activities. All stake holders are cautioned against any such fraud.