India’s current account deficit (CAD) for the October-December quarter (Q3) widened sharply from a year earlier, driven by higher imports, data from the Reserve Bank of India has said.
According to the RBI, current account deficit was at $ 13.5 billion — 2 per cent of GDP — in Q3 of 2017-18, a sharp rise from $8.0 billion (1.4 per cent of GDP) in Q3 of 2016-7 and $7.2 billion (1.1 per cent of GDP) in the preceding quarter (Q2). On a cumulative basis, the CAD increased to 1.9 per cent of GDP in April-December 2017 from 0.7 per cent in the corresponding period of 2016-17 on the back of a widening of the trade deficit.
“The widening of the CAD on a year-on-year (y-o-y) basis was primarily on account of a higher trade deficit at $44.1 billion brought about by a larger increase in merchandise imports relative to exports,” the RBI said. Net services receipts increased by 17.8 per cent on a year-on-year (y-o-y) basis mainly on the back of a rise in net earnings from software services and travel receipts.
However, private transfer receipts, mainly representing remittances by Indians employed overseas, amounted to $ 17.6 billion, increasing by 16.0 per cent from their level a year ago. In the financial account, net foreign direct investment at $ 4.3 billion in Q3 of 2017-18 was lower than $ 9.7 billion in Q3 of 2016-17. “Portfolio investment recorded net inflow of $ 5.3 billion in Q3 of 2017-18 as against an outflow of $ 11.3 billion in Q3 last year on account of net purchases in both the debt and equity markets,” the RBI said.
India witnessed more non-resident Indian deposits during the quarter. Net receipts on account of non-resident deposits amounted to $ 3.1 billion in Q3 of 2017-18 as against net repayments of $ 18.5 billion a year ago. On the other hand, there was an accretion of $ 9.4 billion to the foreign exchange reserves (on BoP basis) as against depletion of $ 1.2 billion in Q3 of 2016-17.
The RBI said India’s trade deficit increased to $ 118.9 billion in April-December 2017 from $82.7 billion in April-December 2016. Net invisible receipts were higher in April-December 2017 mainly due to increase in net services earnings and private transfer receipts. Net FDI inflows during April-December 2017 moderated to $23.7 billion from $30.6 billion during the corresponding period of the previous year.
Foreign exchange reserves in nominal terms (including valuation effects) increased by $39.1 billion during April-December 2017 as against the depletion of $1.3 billion during the same period of the preceding year, the RBI said.
Source: indianexpress.com