Current and Capital Account — Current Affairs 2026

Current Affairs Connections

Recent developments and news linked to Current and Capital Account.

India's Current Account Deficit Narrows Significantly in Q3 FY24 Amidst Robust Services Exports

March 2024 (RBI data release)

The Reserve Bank of India (RBI) recently announced that India's Current Account Deficit (CAD) narrowed considerably to 1.2% of GDP (US$10.5 billion) in Q3 FY24, down from 2.0% in the preceding quarter. This positive development was primarily driven by a lower merchandise trade deficit and strong performance in services exports, particularly IT and IT-enabled services. The moderation in global commodity prices, especially crude oil, also played a crucial role in reducing the import bill. This trend indicates a more sustainable external sector position for India, reducing its vulnerability to global economic shocks.

UPSC Angle: This event is highly relevant for UPSC, highlighting the dynamic nature of India's external sector. Aspirants should analyze the factors contributing to the narrowing CAD (e.g., services exports, commodity prices) and its implications for macroeconomic stability, exchange rate management, and foreign exchange reserves. It also provides a practical context for discussing policy measures to manage CAD.

Background (2024)

Earlier events that provide context for this topic.

Government Eases FDI Norms for Space Sector, Boosts Capital Account Inflows

February 2024

In a significant move to boost investment in the burgeoning space sector, the Indian government approved amendments to the Foreign Direct Investment (FDI) policy, allowing up to 100% FDI in satellite manufacturing and operations under the automatic route for certain sub-sectors. This liberalization aims to attract advanced technology and capital, fostering innovation and domestic manufacturing in a strategic sector. Such policy changes directly impact the capital account by facilitating greater foreign investment inflows, contributing to a capital account surplus and helping finance any current account deficit.

UPSC Angle: This development is critical for understanding capital account liberalization and its sectoral implications. UPSC questions could focus on the rationale behind such policy changes (e.g., technology transfer, Make in India, strategic autonomy), their expected impact on FDI inflows, job creation, and the overall balance of payments. It also connects to India's broader external sector reforms [VY:ECO-12-04] and the government's push for self-reliance in key industries.