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GST Council likely to consider changes in monthly tax payment form

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Currently, GSTR-3B of a taxpayer includes auto drafted input tax credit (ITC) statements based on inward and outward B2B supplies and also red flags any mismatch between GSTR-1 and 3B


The GST Council in its meeting next week is likely to consider a proposal for making changes in the monthly tax payment form -- GSTR-3B, which would include auto-population of outward supplies from sales return and non-editable tax payment table, officials said.

The move would help curb the menace of fake billing, whereby sellers would show higher sales in GSTR-1 to enable purchasers to claim input tax credit (ITC), but report suppressed sales in GSTR-3B to lower GST liability.

Currently, GSTR-3B of a taxpayer includes auto drafted input tax credit (ITC) statements based on inward and outward B2B supplies and also red flags any mismatch between GSTR-1 and 3B.

As per the changes proposed by the Law Committee of the GST Council, there will be auto-population of values from GTSR-1 into GSTR-3B in specific rows to establish one-to-one correspondence to a large extent between rows of the two return forms, thereby providing clarity to the taxpayer and tax officers.

The change would minimize the requirement of user input in GSTR-3B and ease the GSTR-3B filing process, an official said.

The tax payment table in Form GSTR-3B will be auto-populated from other tables in the form and will be non-editable, as per the amended form recommended by the Law Committee of the Council.

Noting that amendment in Form GSTR-3B, as far as feasible, should flow from amendment in Form GSTR-1, with regard to outward liabilities, the Committee suggested that for giving more clarity to the taxpayers, separate amendment table (for liabilities) may be introduced in GSTR-3B, so that any amendment made in Form GSTR-1 gets reflected in GSTR-3B clearly.

Similarly, an amendment table may also be incorporated in GSTR-3B to show any amendment in the ITC portion, the Committee suggested.

Once the changes proposed by the Law Committee gets an in-principle approval of the GST Council, the revamped form will be put in public domain for stakeholder consultation. The  in a meeting later will then approve the final form.

Currently, taxpayers file statements of outward supplies in GSTR-1 by the 11th day of the subsequent month, while  are paid by filing GSTR-3B between 20th, 22nd and 24th of every month for different categories of taxpayers.

Commenting on the proposed changes in GSTR-3B, AMRG & Associates Senior Partner Rajat Mohan said tax filings are set to change for e-commerce operators rendering passenger transportation services, accommodation services, housekeeping services, and cloud kitchens. Such e-commerce players would now be made liable to report supplies on behalf of suppliers in their GSTR -1 and GSTR-3B in separate cells.

"E-commerce players like Uber, Swiggy, Zomato and MMT would see few changes in monthly tax filings that will ensure more data points for the government system for big data analytics," Mohan added.

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Market rebounds from 2-week losing streak, more than 40 small-caps gain 10-28%

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This week, the broader indices underperformed the main indices with BSE Small-cap index adding 1.6 percent, Mid-cap and Large-cap indices rising over 2 percent each

Market rebounds from 2-week losing streak, more than 40 small-caps gain  10-28%

The market bounced back and broke a two-week losing momentum in a highly volatile week ended June 24 one the back of positive global markets, softening of crude prices, positive commentary on inflation from the Reserve Bank and a progressing monsoon.

After suffering a six-day slump, the market started the week on Monday on a positive note and extended the buying the next day, while it remained under pressure around middle of the week. However, it rebounded sharply on Thursday and ended Friday session near the weekly high point.

For the week, the BSE Sensex added 1,367.56 points (2.66 percent) to close at 52,727.98, while the Nifty50 rose 405.8 points (2.65 percent) to end at 15,699.30 levels.

On the sectoral front, the BSE Auto index added 7 percent, and FMCG, Telecom, Information Technology and Healthcare indices added 3 percent each. The Metal index, however, shed 4.9 percent.

This week, the broader indices underperformed the main indices with the BSE Smallcap index adding 1.6 percent and Mid-cap and Large-cap indices rising over 2 percent each.

The market recorded some recovery in the last couple of days with a moderation in oil prices, and widespread and deepening fears of a recession. The global economic growth rate is already pitched lower by many international agencies. The interest rate action and liquidity normalisation are likely to pull down growth over a period of time, and therefore, the focus on price level may have to be moderated progressively, and this may support the economy in future," said Dr Joseph Thomas, Head of Research at Emkay Wealth Management.

"This has brought some relief to the markets. But the uncertainties around both price level and growth still continue, as the Fed has confirmed that the strong rate action will continue. The coming week would also witness some amount of volatility as the sky is still overcast with clouds of uncertainty," he said.

In the last week, foreign institutional investors (FIIs) offloaded equities worth of Rs 11,511.77 crore, while domestic institutional investors (DIIs) bought equities worth of Rs 11,670.62 crore.

FIIs sold Rs 53,600.40 crore of equities so far in June while their domestic counterparts pumped Rs 41,983.47 5 crore into the market.

More than 40 small-cap stocks added 10-28 percent last week. These include ITI, Spandana Sphoorty Financial, SEPC, State Trading Corporation of India, Chemplast Sanmar, Nazara Technologies, JTEKT India, Sterling Tools, Rolex Rings, Tribhovandas Bhimji Zaveri, Munjal Auto Industries, Jain Irrigation Systems and MMTC.

On the other hand, Brightcom Group, Dhanvarsha Finvest, Future Supply Chain Solutions, Future Lifestyle Fashions, Future Retail, KBC Global, Suryoday Small Finance Bank, Mangalore Refinery and Petrochemicals and Hester Biosciences fell 11-22 percent.

"The previous week’s brutal knock was followed by a muted start on Monday. However, markets immediately resumed their downtrend and slid towards the lows of 15,200. Fortunately, the picture improved slightly on the global front which led to a smart recovery from the lower levels on the same day. In fact, in the subsequent session, our markets had a decent relief rally to retest 15,700," said Sameet Chavan, Chief Analyst-Technical and Derivatives, at Angel One.

"Around the mid-week, we did feel some tremors, but fortunately, bulls were prepared this time to cushion the markets around key supports. In the latter half of the week, we witnessed good broad-based participation to conclude at the highest point of the week around 15,700."

He agrees with the fact that we are still not out of the woods yet and till the time Nifty does not surpass its major hurdle of 15,900–16,000 on a closing basis, he advised, one should avoid aggressive bets on the long side. It would be interesting to see how the market behaves in the first half of the week beginning tomorrow.

"If global relief extends, we may see the Nifty surpassing the 16,000 mark and this would certainly trigger a sharp short-covering rally in the market. Before this, 15,800–15,900–16,000 is to be considered a cluster of resistance. On the flip side, the immediate supports are placed at 15,500–15,350–15,200," Chavan said.

Bank of India, Info Edge India, Jubilant FoodWorks, Indraprastha Gas, Shriram Transport Finance Corporation, Endurance Technologies, TVS Motor Company, RBL Bank and Nuvoco Vistas Corporation were among the midcap gainers.

Among BSE 500 index gained 2.5 percent led by ITI, Chemplast Sanmar, MMTC, Asahi India Glass, Aptus Value Housing Finance India, Responsive Industries, Hero MotoCorp, Blue Dart Express, Jubilant Ingrevia, Sapphire Foods India and Strides Pharma Science.

"The much awaited pullback rally was seen in the markets in the week gone by. The momentum readings were too oversold and the RSI readings had shown a positive divergence on charts. The move above 15,400 with a gap led to a change in sentiment and thus, we witnessed a pullback move which was much on the cards," said Ruchit Jain, Lead Research,

"Now the Nifty has ended right around the previous support zone which was breached recently. At times, the support broken then becomes resistance on pullback but looking at the data, we believe the momentum has still more room on upside."

Many stocks that had seen short formations in this series and were trading around their respective supports saw short-coverings. The banking space has led but still some sectors such as IT, metals and mid-caps have short positions intact and if they see any short covering in the expiry week, then it could lift the markets higher. However, traders should take one step at a time and avoid aggressive trades as there are resistances seen one after another on the way up.

Where is Nifty50 headed?

Yesha Shah, Head of Equity Research, Samco Securities

The coming week has a host of events arriving which could affect the mood of the market. Globally, investors will keenly analyze the US quarterly GDP growth rate numbers. The USA would officially enter into a recession if they post a negative growth and thus this could have a spill-over effect on global markets.

In India, the vehicle sales figures will continue to fuel stock-specific moves on D-Street as investors attempt to decipher the future trend.

Moreover, the monthly F&O expiry in the second half of the week may cause volatility in the indices. Investors are thus advised to accumulate good stocks with strong fundamentals, free cash flows, and lower leverage over the long run while disregarding short-term difficulties.

Prashanth Tapse, Vice-President (Research), Mehta Equities

The market can move up for some time, but we suspect — exhaustion will occur and when that happens we will see a major correction. Technically, with an inter-week perspective, Nifty’s biggest support is seen at 15363 and below the same, expect a waterfall of selling, while a major hurdle is seen at 15807 and then all eyes will be on the 16157 mark.

We suspect Bank Nifty to outperform Nifty in next week’s trade.

Amol Athawale, Deputy Vice President - Technical Research, Kotak Securities

Technically, on weekly charts the Nifty has formed a long bullish candle which is broadly positive. On daily and intraday charts, the market is holding a higher bottom formation that also supports short-term uptrend.

For the bulls 15700-15750 would act as a key resistance level, while on the flip side 15500 and 15400 could be strong support zones for the short term traders.

Above 15750, the index could move up to 15850-15925. On the other side, a fresh round of selling is possible only after 15400 and below the same it could retest the level of 15,250-15,150.

RBI policy action likely to be moderate than other nations: Michael Patra

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Speaking at a session on 'Geo-Political Spill-overs and Indian Economy' at PHDCCI here, Patra said there are indications that inflation may be peakingMichael Patra, Deputy Governor, RBI

RBI Deputy Governor Michael Debabrata Patra on Friday exuded confidence that the monetary policy actions will be more moderate than the rest of the world, as inflation is expected to fall below 6 per cent in the January-March quarter of the current fiscal.

The Reserve Bank has already raised the key policy rate by 90 basis points in May and June to 4.9 per cent to tame high inflation, mainly due to supply disruptions on account of the ongoing Russia-Ukraine war.

Speaking at a session on 'Geo-Political Spill-overs and Indian Economy' at PHDCCI here, Patra said there are indications that inflation may be peaking.

"As monetary policy works through into the economy...inflation is expected to fall back into the threshold in the fourth quarter of 2022-23 and fall even further in the next year. This is only the baseline scenario," he said, adding that because of initiatives taken so far, the inflation may fall "sooner and faster".

"Therefore, in this world of global inflation crisis, it is possibly better to look at the change in inflation, not the level," said the Deputy Governor, who looks after the monetary policy department in the RBI.

He is also a member of the Monetary Policy Committee (MPC), which decides the key policy rate (repo).

The government has tasked the RBI to ensure inflation remains at 4 per cent with a two per cent deviation on either side.

While the retail inflation based on Consumer Price Index (CPI) moderated to 7.04 per cent in May from 7.8 per cent in April, it remained above the RBI's threshold of 6 per cent for the fifth month in a row.

"Against this backdrop, it is our hope that required monetary policy actions in India will be more moderate than elsewhere in the world and that we will be able to bring inflation back to target within a two-year time span. If the monsoon brings with it a more benign outlook on food prices, India would have tamed the inflation crisis even earlier," he said.

Observing that the decline in inflation will be very "grudging", Patra said India will "succeed in bending down the future trajectory of inflation and thereby it will win the war".

Earlier this month, the Reserve Bank in its bi-monthly monetary policy review raised the benchmark repo rate -- at which it lends short-term money to banks -- by a sharp 0.50 per cent to 4.90 per cent to rein in spiralling prices. It followed an off-cycle meeting on May 4, when the central bank hiked the repo rate by 0.40 per cent.

The RBI had also raised the inflation projection to 6.7 per cent for the current fiscal year from its earlier forecast of 5.7 per cent.

The next meeting of the MPC is scheduled to take place during August 2-4, 2022.

Chidambaram targets govt over state of economy

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Chidambaram also questioned the government for "backsliding on the fiscal deficit target for the current year.Chidambaram targets govt over state of economy

Senior Congress leader P Chidambaram on Friday criticised the government over the state of the Indian economy, asking if it was in the "pink of health" after high fiscal deficit, inflation, and the depreciating value of the Rupee. He also questioned the government for "backsliding on the fiscal deficit target for the current year.

"Within months of setting the FD target at 6.4 per cent for 2022-23, government is backsliding. Now, Government is saying it will 'try to keep the FD at 6.7 per cent', same as the level in 2021-22," the former finance minister said on Twitter.

"High FD, high inflation, huge FPI outflows, depreciating rupee, depletion of forex reserves -- what do they point to? Is the Indian economy in the pink of health," he questioned.

The Congress party and its leaders have been questioning the government's economic policies and accusing the BJP dispensation of "mismanaging" the country's economy.

Dept of Expenditure warns against extending the free food scheme: Report

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In an internal note, the FinMin's Dept of Expenditure has warned that extension of the free food scheme beyond September or any more tax cuts will have consequences for the Centre's fiscal situationNew Delhi: Union Finance Minister Nirmala Sitharaman during 'iconic week celebration' of the Ministry of Finance, in New Delhi, Monday, June 6, 2022. (PTI Photo

The finance ministry's Department of Expenditure has argued against extending the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) beyond September or announcing any significant tax cuts, warning of the consequences for the Centre's fiscal position, a  report said.

The government in March extended the PMGKAY, the free food ration scheme rolled out during the Covid-led lockdown, for six months till September. The Centre has allocated Rs 2.07 trillion for food subsidies in the current fiscal year, while the extension of PMGKAY till September is expected to increase the  bill to nearly Rs 2.87 trillion, The Economic Times reported.

If the government decides to extend the scheme further, it would cost the Centre another Rs 80,000 crore for another six months, swelling the food subsidy amount for FY23 to Rs 3.7 trillion.

Also Read: 'One Nation, One Ration Card' programme implemented across India

More tax cuts or subsidy extensions would adversely hit the fiscal math, the union finance ministry's Department of Expenditure said in an internal note. The department said, "In particular, it is not advisable to continue the PMGKAY beyond its present extension, both on the grounds of food security and on fiscal grounds," quoted ET.

The Centre's recent decisions to extend free ration, hike fertiliser subsidy, reintroduce cooking gas subsidy, excise duty cut on petrol, diesel and cut in customs duty on edible oils have created a serious fiscal situation, the department said.

The Centre's move last month to cut excise duty on fuel to soften the blow of inflation will cause a revenue loss of about Rs 1 trillion, the note said.

To curb inflation, the Centre last month announced a reduction of excise duties on petrol and diesel by Rs 8 and Rs 6, respectively. At the same time, it also announced a subsidy of Rs 200 per domestic LPG cylinder for up to 12 cylinders in a year.

For FY23, the government has budgeted a fiscal deficit of 6.4 per cent of GDP, while Fitch Ratings expect it to be 6.8 per cent due to higher subsidies and revenue loss due to duty cuts.

Humble rice bran becomes hot commodity as India scours for edible oils

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A by-product in rice milling, rice bran has been traditionally used for cattle and poultry feed. In recent years, oil mills have started extracting rice oil, which is popular among health-conscious consumers but historically more expensive than rival oils.Humble rice bran becomes hot commodity as India scours for edible oils |  Reuters

Rice bran has become a sought-after commodity in India as the world's biggest importer of vegetable oils tries to overcome an edible oil shortage caused by global supply disruptions.

A by-product in rice milling, rice bran has been traditionally used for cattle and poultry feed. In recent years, oil mills have started extracting rice oil, which is popular among health-conscious consumers but historically more expensive than rival oils.

Rice bran oil accounts for a small portion of overall vegoil consumption in India but is one of the fastest-growing among edible oils, industry officials say, and production and imports are set to increase to meet the demand.

The recent rally in global edible oil prices fuelled by Indonesia's restrictions on palm oil exports and disruptions to sunflower oil shipments from Ukraine has wiped out rice bran oil's traditional premium over rival oils. That has triggered a surge in demand for bran oil which has similar taste properties to sunflower oil.

As sunflower oil imports plunged from Ukraine, consumers started replacing it with rice bran oil, said B.V. Mehta, secretary general of the International Association of Rice Bran Oil (IARBO). India usually fulfills more than two-thirds of its sunflower oil requirements through imports from Ukraine.

"Because of COVID-19, I was looking for healthier food options. I first used rice bran oil for health benefits six months ago and since then I've been using it," said Aditi Sharma, a Mumbai-based homemaker, who switched to rice bran oil from sunflower oil.

"It tastes good and is good for health as well," Sharma said, referring to the oil's cholestrol-lowering and anti-oxidative properties.

In India, rice bran oil is now trading at 147,000 Indian rupees ($1,879) per tonne compared with sunflower oil at 170,000 rupees.

Rice bran oil usually commands around a 25% premium over other oils, but in recent months has been cheaper than imported vegetable oils, making it more affordable for the masses, according to data compiled by Solvent Extractors' Association of India (SEA).

Competitive prices boosted rice bran oil consumption since March and has encouraged companies to extract more oil.

Sharma said that even if premiums returned, she would still buy rice bran oil for her family of four.


The demand for rice bran oil has become so strong that it has flipped the economics for rice millers, who are now prioritising bran oil output.

"For rice mills, instead of by-product, now rice bran has become a main product," said Puneet Goyal, chief executive officer at Ricela Group, the country's biggest producer of rice bran oil.

To meet rising demand Ricela is planning to increase oil refining capacity to 750 tonnes per day in the next two months from 600 tonnes, Goyal said.

With a vegetable oil shortage, oil mills are ready to pay record high prices for bran, said B.V. Krishna Rao, president of the All India Rice Exporters Association.

Rice bran prices have jumped to 30,000 rupees to 36,000 rupees per tonne compared with paddy prices of around 19,000 rupees, which is milled for rice extraction.

However, a shortage of oil processors in all rice milling areas remains a key limiting factor on bran oil supply, as rice bran must be processed into oil within 48 hours of being separated from chaff in order to be fit for human consumption.

Only 55% of bran is currently processed, with the remainder going to the lower priced feed market.

Even so, with several oil processors maximising output, the country is on course for record bran oil production of 1.05 million tonnes this year, up from around 950,000 tonnes in 2021, which should help India reduce imports of rival oils.


Edible oil consumption in India trebled over the past two decades as the population rose, incomes increased and people started to eat out more.

The country consumes around 23 million tonnes of vegetable oil per annum, with nearly 13 million tonnes coming from imports. Locally-produced bran oil can meet about 5% of overall vegoil consumption.

Companies such as Adani Wilmar, Emami and Cargill's Indian unit have launched their own rice bran oil brands to meet rising urban demand.

Rice bran oil brands have become popular and consumer acceptance has been rising, said Himanshu Agarwal, executive director at Satyam Balajee, India's biggest rice exporter.

"This new segment is just growing," Agarwal said, adding that companies previously offering mainly palm, soybean, sunflower and rapeseed oils were now launching rice bran oil products

Even institutional buyers such as PepsiCo and Haldirams are increasing use of bran oil for frying, said Goyal of Ricela.

But local supplies are not enough to cater to rising demand.

"A few companies are importing rice bran oil from Bangladesh, but even Bangladesh has limited surplus for the exports," said IARBO's Mehta.

Vodafone Idea defers Rs 8,837 crore AGR dues payment by four years

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The company's board decided on Wednesday to defer the AGR dues of Rs 8837 crore

vodafone, idea, VI

 (Vi) has opted for a four year moratorium on payment of Rs 8837 crore in AGR dues in addition to one exercised last year. Similarly, the telecom company has the option to convert interest on deferred amount into additional equity to government.

The government is set to own 33 per cent stake in Vi following an earlier decision to convert interest with net present value of interest worth Rs 16,000 crore into equity.

In a stock exchange notification Vi said that it received a letter from government on June 15 offering four year moratorium for all AGR dues upto financial year 2018-19.

The company's board decided on Wednesday to defer the AGR dues of Rs 8,837 crore. That amount is subject to revision on account of disposal of various representations and final amount has to be paid in six equal instalments after end of moratorium in March 2026.

Vi has to decide on conversion of interest on these AGR dues in 90 days.

Last September the government gave telecom  an option to defer AGR payments for four years as a part of its telecom reforms package. These covered dues upto 2016-17 which were a part of the Supreme Court order. Vi opted for a moratorium on these dues last October.

According to official data, telecom operators owe over Rs 1.65 trillion to the government in  up to financial year 2018-19.

The fresh calculation shows AGR liability on Bharti Airtel was Rs 31,280 crore,  Rs 59,236.63 crore, Reliance Jio Rs 631 crore, BSNL Rs 16,224 crore, MTNL Rs 5,009.1 crore up to financial year 2018-19.

The company in a separate filing said that its board has approved raising of Rs 436.21 crore from Vodafone Group company Euro Pacific Securities through issue of preferential share at a unit price of Rs 10.2 apiece or warrants at the same price.

Bangladesh tries to secure wheat from Russia as India stops exports: Sources

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Bangladesh is trying to secure wheat supplies from Russia in a government-to-government deal after it's biggest supplier India banned exports of the grain last month to contain local prices, government and trade officials told Reuters on Wednesday.Bangladesh tries to secure wheat from Russia as India stops exports -  sources

The supply deal with Russia, the world's biggest wheat exporter, could help Dhaka in meeting its needs below the elevated global prices, industry officials said.

Bangladesh is holding a virtual meeting with Russia on Thursday to finalise the deal, said a senior official with Bangladesh's food ministry.

"We'll initially seek at least 200,000 tonnes of wheat from Russia," said the official, who declined to be named.

The Ministry of Food did not immediately respond to a request for comment.

Bangladesh imports around 7 million tonnes of wheat and last year more than-two thirds of that came from India.

After India's export ban, Bangladesh tried to secure supplies via international tenders but has cancelled them because of high prices.

Bangladesh was paying less than $400 per tonne on the cost and freight basis for Indian wheat, but after the ban other suppliers started quoting above $460, which raised local prices in Bangladesh, said a Mumbai-based dealer with a global trading firm.

The Bangladesh government is struggling to contain soaring commodity prices, with inflation at an eight-year high in May, while the country's wheat stocks hit their lowest in three years at 166,000 tonnes.

"There are many countries who can supply wheat to Bangladesh, but key issue is price. Russia can offer discount over global prices," said a New Delhi-based dealer with a global trading firm.

But paying for Russian wheat would be a challenge for Dhaka given Western sanctions on Moscow.

"All the issues, including payment, will be discussed in the meeting. Let's see," the government official said.

Bangladesh would initially buy small amount of Russian wheat and will increase buying if "all goes well on arranging shipments and payment's front," said the New-Delhi based dealer.

Govt won't offer tax waivers to be part of global bond index sooner

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Under existing rules, an overseas investor is required to pay a short-term capital gains tax of 30% if a listed bond is sold within 12 months

tax treaty

India is opposed to providing any capital gains tax waivers to overseas debt investors even if it delays its goal of getting its bonds included in global bond indexes, two sources familiar with the matter said.

The Indian government had initiated the process of listing its debt in global indexes in 2019, and has been in discussions with J.P.Morgan and Bloomberg-Barclays while also talking to Euroclear with regards to clearing and settlement.

Under existing rules, an overseas investor is required to pay a short-term capital gains tax of 30% if a listed bond is sold within 12 months.

The global bond index listing plan was widely expected to be announced early this year but the government's insistence on capital gains has slowed talks with index operators, officials privy to discussions told Reuters.

The finance ministry did not immediately reply to a mail and a message seeking comments.

In October last year, Reserve Bank of India Governor Shaktikanta Das said the index inclusion was in an advanced stage of discussions with major index providers and should happen "maybe in the next few months".

"The taxation part of it is the only thing that is yet to be resolved. But there is no rationale to tax citizens and not tax overseas investors," a senior source aware of the discussions said.

Domestic investors have to pay short-term capital gains tax on debt investments as per their prevailing tax slabs and additional 4% cess.

"The risks of such index inclusions have always been there and though India is in a much better shape now, globally things are fairly volatile and it may not necessarily be the best time to go for this," he added.

Index inclusion will aid sentiment in the near-term and incremental foreign investment inflows over the medium term would help policymakers to buy some time until the global market conditions become somewhat easier to navigate, Deutsche Bank said in a recent note.

"Global bond index inclusion is not a panacea for all the challenges faced by India at this juncture, but at least it can help on the margin," the bank said.

Chart of the Day: Hurtling towards a wide current account deficit

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India's current account deficit widened slightly in FY22 but the real challenge would come in FY23 as adverse global conditions stretch the CAD further.Chart of the Day: Hurtling towards a wide current account deficit

India’s current account deficit (CAD) for FY22 widened to $38.7 billion or 1.2 percent of gross domestic product (GDP) from $23.7 billion (0.9 percent of GDP) in FY21.

The wider deficit is on expected lines as a surge in global oil prices inflated the petroleum and oil bill for the economy during the year. As a result, the trade deficit widened sharply by $185.5 billion.

Since oil prices are likely to remain elevated, economists expect the CAD to widen further in the coming year. What’s more is that the odds of a recession in the US have risen which could dampen the prospects for exports as the country remains the biggest export destination for Indian goods and services.

Then there is the challenge of financing the CAD. Portfolio outflows were persistent but foreign direct investments (FDI) saved the day in FY22. The fall in dollar borrowings by companies also contributed to inflows. But in FY23, funding costs could increase the outflow via commercial borrowings. Together with portfolio outflows, the financing of the CAD could become a challenge. India’s balance of payments is onto a tough path.

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