Current Account

noun (countable), noun phrase

/ˈkʌrənt əˈkaʊnt/

One of the two main components of a country's Balance of Payments (BoP), recording all transactions in goods (merchandise trade), services (software, tourism), primary income (remittances, dividends), and secondary income (grants) between residents and non-residents. India is structurally a current account deficit (CAD) country owing to its dependence on commodity imports, particularly crude oil and gold; India's CAD narrowed to 0.7% of GDP in 2023-24, aided by record services exports and resilient remittances. Under the IMF classification, current account convertibility (accepted by India in 1994) means these transactions face no exchange restrictions.

✍️ Usage in a UPSC answer

India's current account deficit moderated to 1.2% of GDP in the second half of 2023-24, supported by a $35 billion software services surplus and remittances exceeding $120 billion — the world's largest remittance inflow for that year.

Synonyms

trade accountbalance of payments current componentexternal accounttrade balance (partial synonym)

Antonyms

capital accountfinancial account

🌱 Word Family

current account deficit (CAD, noun phrase), current account surplus (noun phrase), current account balance (noun phrase), current account convertibility (noun phrase)

🔡 Root

Latin currere = to run (implying ongoing/flowing transactions) + Latin computare = to reckon

📜 Etymology

The term 'current' in this context derives from Latin currere (to run, flow), signifying transactions that flow continuously in the normal course of economic activity, as distinct from 'capital' transactions which represent stock changes. The modern BoP framework classifying current vs. capital account was standardised under the IMF's Balance of Payments Manual, first published in 1948.

🧠 Memory Hook

CURRENT = flows that are CURRENTLY moving — goods coming IN, services going OUT, money for remittances. It is the 'running tab' of a country's daily economic dealings with the world.

📝 Seen in UPSC Question Papers

Prelims 2025 — International Trade
Prelims 2014 — External Sector
Prelims 2014 — Indirect Taxation
Prelims 2011 — External Sector

Real UPSC previous-year questions whose text uses “Current Account” — proof this word earns its place on your list.

💰 Indian Economy 📖 Seen in: Indian Economy — Growth, Planning & De...

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