Impact of Macro Economic Variables on India's Current Account Position

This study focuses on the present situation of India’s current account and the impact of macroeconomic variables on it for a period of ten years from 2009-10 to 2018-19. For this study, this paper has considered the Current Account Deficit (CAD) as a dependent variable and macroeconomic variables as independent variables. The paper examined the long-run and short-run impact of macroeconomic variables on CAD using the Auto-Regressive Distribution Lag (ARDL) model in Eviews software. The result shows Term of Trade, Growth of real GDP, Trade Openness, and Exchange Rate have a positive impact on CAD. Similarly, Net Foreign Assets, Gross Fixed Capital Formation, foreign direct investment, and Inflation have a negative impact on CAD. The result of ECM shows except for Gross fixed capital formation, Exchange rate, and inflation other variables have a positive impact on CAD. There is no co-integration found in ARDL bound test and the model is stable