India’s current account deficit (CAD) narrowed to 1.3% of GDP in third quarter of the fiscal as against 1.5% in the same period last year, mainly on account of lower trade deficit.
“India’s CAD at $ 7.1 billion (1.3% of GDP) in Q3 of 2015-16 was lower than $ 7.7 billion (1.5% of GDP) in Q3 of 2014-15 and $ 8.7 billion (1.7% of GDP) in the preceding quarter,” Reserve Bank of India said.
While releasing the Balance of Payments data during the October-December quarter of 2015-16, it said the contraction in CAD was primarily on account of a lower trade deficit ($ 34 billion) as against in Q3 of last year ($ 38.6 billion) and $ 37.4 billion in the preceding quarter.
On a cumulative basis, the CAD narrowed to 1.4% of GDP in April-December from 1.7% in the corresponding period of 2014-15, on the back of the contraction in the trade deficit.
RBI further said net services receipts moderated on a year-on-year basis largely due to fall in export receipts in transport and financial services, though there has been a marginal improvement over the preceding quarter.
Private transfer receipts, mainly representing remittances by Indians employed overseas, amounted to $ 15.8 billion, a decline from their level in the preceding quarter as well as from a year ago.
The central bank also said that after moderating in second quarter, net foreign direct investment again picked up and stood at $ 10.8 billion in third quarter.
“Non-resident Indian deposits moderated significantly in Q3 of 2015-16 over their level in Q3 last year as well as the preceding quarter,” RBI said.
Foreign exchange reserves (on a BoP basis) increased by $ 4.1 billion in third quarter of 2015-16.
During April-December, there was an accretion of $ 14.6 billion to foreign exchange reserves (on a BoP basis) compared with $ 31.3 billion in the corresponding period of 2014-15.
RBI also said there has been a marginal net outflow of $ 0.2 billion in portfolio investment in third quarter of 2015-16 as against net outflow of $3.5 billion in the preceding quarter and “equity outflows in Q3 were almost offset by inflows into the debt segment”.