India’s second quarter current account deficit (CAD) more than doubled to $7.2 billion or 1.2% of GDP fiscal on annual basis, mainly due to higher oil imports.
However, CAD in the second quarter narrowed sharply from $15 billion (2.5% of GDP) in the preceding quarter, the RBI said on Wednesday.
Though, it was substantially higher than $3.4 billion (0.6% of GDP) in second quarter of 2016-17.
In general terms, CAD refers to the difference between inflow and outflow of foreign exchange that has a bearing on exchange rate.
“The widening of the CAD on a year-on-year (y-o-y) basis was primarily on account of a higher trade deficit ($32.8 billion) brought about by a larger increase in merchandise imports relative to exports,” the RBI said.
On a cumulative basis, the CAD increased to 1.8 %of GDP in the first half of 2017-18 from 0.4% in comparable period of last fiscal on the back of widening of the trade deficit.
India imported 124.6 million tonnes of crude oil and petroleum products in April-September for $43.5 billion (Rs 2.8 lakh crore) as against 126.1 MT imported for $37 billion (Rs 2.48 lakh crore).
During the September quarter, the RBI said net services receipts increased by 13.1%on a y-o-y basis mainly on the back of a rise in net earnings from software services and travel receipts.
{{/usCountry}}During the September quarter, the RBI said net services receipts increased by 13.1%on a y-o-y basis mainly on the back of a rise in net earnings from software services and travel receipts.
{{/usCountry}}“Private transfer receipts, mainly representing remittances by Indians employed overseas, amounted to $ 17.4 billion, increasing by 14.7% from their level a year ago,” the central bank said.
In the financial account, net foreign direct investment at $12.4 billion in the second quarter of 2017-18 moderated from its level in similar period of last fiscal.
Further, portfolio investment recorded net inflow of $2.1 billion, lower than $ 6.1 billion in second quarter last year on account of net sale in the equity market, the RBI said.
In the quarter ending September, there was an accretion of $9.5 billion to the foreign exchange reserves as compared to $8.5 billion in similar period of 2016-17 and $11.4 billion in the preceding quarter.
India’s trade deficit increased to $74.8 billion in the first of 2017-18 from $49.4 billion in comparable period of 2016-17.