Current account is a component of a nation’s balance of payments. It measures the value of goods and services that a nation imports (brings in) and exports (sells outside).

Another way of explaining current account deficit (CAD is the difference between the outflow and the inflow of foreign exchange.

Thus, when the value of imports exceeds that of exports, the current account is in deficit, whereas when the value of exports exceeds that of imports, the current account is said to be in surplus.

Current account also includes other incomes and expenses such as net income (interest as well as dividends) and foreign aids.

Current account deficit, along with other deficits are discussed by the Finance Minister while presenting the Union Budget who also highlights how the Finance Ministry is working towards lowering the deficit.