Current account deficit doubles to USD 8.2 bn in Dec quarter

Tuesday, Mar 10, 2015,21:01 IST By metrovaartha A A A

Mumbai | The current account deficit (CAD) nearly doubled to USD 8.2 billion or 1.6 percent of the GDP in the October-December period, the Reserve Bank data showed today. In the same period a year ago, CAD — which is the gap between foreign exchange earned and spent — stood at USD 4.2 billion or 0.9 per cent of GDP.
On sequential basis, however, the CAD narrowed from USD 10.1 billion or 2 per cent of GDP in the September quarter.
It may be noted that heavy duties on import of gold were in place last fiscal, which are partially withdrawn now. Additionally, the country has also benefited from the lower crude prices.
The Reserve Bank of India (RBI) attributed narrowing of CAD on sequential basis to a pick-up in services exports, improvement in net earnings through travel and software services and lower net outflows under primary income profit, dividend and interest.
But the merchandise trade deficit widened to USD 39.2 billion during the reporting quarter as exports declined 7.3 per cent against a 4.5 per cent dip in imports.
The inward remittances stood at USD 17.5 billion and supported the balance of payments with a 12.6 per cent share in the overall receipts, it said.
The net inflows of foreign direct and portfolio investments were somewhat lower compared to the September quarter, while the net loans availed by banks increased by USD 6.6 billion for the quarter mainly on account of inward repatriations of assets held abroad by banks, it said.
The capital account and financial account surplus came in at USD 10 billion during the reporting quarter, compared to USD 4.8 billion in the year-ago quarter.
There was a net accretion of USD 13.2 billion to the foreign exchange reserves during the quarter, which was double from USD 6.9 billion in the preceding quarter but lower than the special non-residents’ and banks overseas borrowings-boosted figure last year.
For the April-December period, the RBI said there is a considerable improvement in the BoP on account of higher growth in merchandise exports and a marginal rise in imports.
During the first nine months of the fiscal, the CAD shrank to USD 26.2 billion or 1.7 percent of GDP against USD 31.1 billion or 2.3 percent of GDP during the same period last fiscal, it said.
The trade deficit narrowed to USD 112.5 billion in the April-December period from USD 116.9 billion a year-ago.
The net inflows under the capital and financial account rose to USD 61.7 billion in the first nine months of the fiscal up from USD 39.6 billion in the year-ago period.
The total accretion to the forex kitty for the first three quarters was USD 31.3 billion against a low USD 8.4 billion in the previous fiscal.