Q3 current account deficit narrows to 2.2 per cent of GDP
India’s current account deficit, a key indicator of the country’s external sector, declined to $18.2 billion or 2.2% of the gross domestic product (GDP)in the December quarter of the current fiscal.
Published: 01st April 2023 07:10 AM | Last Updated: 01st April 2023 07:10 AM | A+A A-
For representational purpose only. (Photo | PTI)
MUMBAI: India’s current account deficit, a key indicator of the country’s external sector, declined to $18.2 billion or 2.2% of the gross domestic product (GDP)in the December quarter of the current fiscal.
The decline was mainly due to the narrowing of the merchandise trade deficit, according to the data released by the Reserve Bank of India (RBI) on Friday. The country’s foreign exchange reserves rose $5.98 billion to $578.78 billion as of March 24.
The current account deficit (CAD) was $30.9 billion or 3.7%of the GDP in the second quarter of 2022-23 and $22.2 billion or 2.7% of the GDP in the December quarter of 2021-22.
“Underlying the lower current account deficit in Q3:2022-23 was a narrowing of merchandise trade deficit to $72.7 billion from $78.3 billion in Q2:2022-23, coupled with robust services and private transfer receipts,” RBI said.
Services exports reported a growth of 24.5 per cent on a year-on-year (y-o-y) basis on the back of rising exports of software, business and travel services. Net services receipts increased both sequentially and on a year-on-year basis.
In the December quarter, net foreign direct investment decreased to $2.1 billion from $4.6 billion in the year-ago period. Net foreign portfolio investment recorded inflows of $4.6 billion in the December quarter as against an outflow of $5.8 billion in the third quarter of 2021-22. RBI said net outgo from the primary income account, mainly reflecting investment income payments, increased to $12.7 billion from $11.5 billion in the year-ago period.
Private transfer receipts, mainly representing remittances by Indians employed overseas, amounted to $30.8 billion in the December quarter, an increase of 31.7 per cent from their level a year ago.
India recorded a current account deficit of 2.7% of GDP during April-December 2022 period as against a deficit of 1.1% during April-December 2021 period. Non-resident deposits recorded net inflows of $2.6 billion in the third quarter of the current fiscal as compared to net inflows of $1.3 billion in the year-ago period.
Merchandise trade helps narrow CAD
The decline was mainly due to the narrowing of the merchandise trade deficit, according to the data released by the Reserve Bank of India (RBI) on Friday. The country’s foreign exchange reserves rose $5.98 billion to $578.78 billion as of March 24. The current account deficit (CAD) was $30.9 billion or 3.7%of the GDP in the second quarter of 2022-23 and at $22.2 billion or 2.7% of the GDP in the December quarter of 2021-22
