MUMBAI: The current account deficit (CAD), which is a measure of the health of the exim trade wherein higher imports over exports lead to a deficit, has remained flat at 1.2 percent of GDP or $11.2 billion in the second quarter, as against 1.3 percent or $11.3 billion a year ago. The deficit stood at $9.7 billion or 1.1 percent in the first quarter.
According to the RBI data released Friday, even in the first half of the current fiscal, CAD remained flat at 1.2 percent or $21.4 billion on a year-on-year basis.
The overall numbers were positive despite the fact that the merchandise trade deficit increased to $75.3 billion in Q2 from $64.5 billion on-year, the RBI data showed. Robust services exports helped cushion the poor show by exim trade and there was also an increase in net services receipts at $44.5 billion in the quarter from $39.9 billion a year ago.
In the financial account, net foreign direct investment recorded a higher outflow of $2.2 billion in Q2 compared to an outflow of $0.8 billion a year ago. However, net inflows under foreign portfolio investment increased to $19.9 billion in the second quarter from $4.9 billion on-year, while ECB inflows amounted to $5 billion, a reversal from the outflows of $1.9 billion a year ago.
NRI deposits almost doubled to $6.2 billion from $3.2 billion a year ago.
Commenting on the CAD numbers, Aditi Nayar, the chief economist at Icra Ratings, said the better than expected reading provides some solace to the sharply weakening rupee.
“Looking ahead, the initial estimate of a record-high trade deficit in November could well bloat the CAD to 2.5-2.7 percent in the third quarter and for the full year it should print in around 1.1-1.2 percent," she said.