India Considers Measures to Curb Current Account Deficit Amidst Weakening Rupee

NEW DELHI/MUMBAI: Amid a depreciating rupee, commerce and industry minister Piyush Goyal on Thursday said govt is considering several measures to contain the widening current account deficit (CAD). "We are monitoring the situation. All the various arms of the govt are working as a team. Several steps are under consideration. The situation globally is quite challenging, but we have the confidence and courage of conviction that we will come out winners even in this challenging time," Goyal told reporters. While maintaining that govt has no plans to cut non-essential imports, the minister said public has been urged to be more conscious on products, which are import-dependent. A few days ago, PM Narendra Modi had urged citizens to defer gold purchases and avoid destination weddings overseas. Gold imports rose 24% to an all-time high of $72 billion during the last financial year, although volumes fell 4.8% to 721 tonnes. Silver imports soared 150% $12 billion last year, with volumes rising 42% to 7,335 tonnes. Govt has responded by raising import duty from 6% to 15%. "With the prospect of oil trade deficit increasing and likely pressure on remittances from West Asia, we forecast India's current account deficit (CAD) to rise to 2.2% this fiscal from an estimated 0.8% last fiscal," Crisil economists led by DK Joshi said in a recent analysis. While trade deficit was driven by a spike in gold and silver prices last year, the oil shock following the West Asia conflict and the withdrawal of portfolio investment has resulted in a massive weakening of the rupee, which flirted with the 97-mark against the dollar on Wednesday. On Thursday, however, it ended 62 paise higher at 96.20, aided by central bank intervention and a pullback in crude oil prices. The Indian currency is amongst the worst performers in Asia, having depreciated around 7% so far in 2026. Dealers said the rupee opened 50 paise stronger and gained ground with heavy duty intervention by public sector banks on behalf of RBI. "The recovery in rupee is currently being driven more by profit-booking and softer crude prices rather than any major structural reversal, though lower oil prices can continue to provide temporary relief to the currency," said Jateen Trivedi, research analyst with LKP Securities. A weak rupee is bad news for imports, especially crude, as it can fuel domestic inflation. "This exogenous energy shock has upset the macro-apple cart and kept the rupee under pressure. Compared with previous crises, India's external balances are starting from a much stronger position, particularly in terms of current account stability and foreign exchange reserves," DBS economist Radhika Rao and forex strategist Philip Lee said in a note on Wednesday.