India’s current account deficit (CAD) narrowed to 1.3 per cent of GDP in third quarter of the fiscal as against 1.5 per cent in the same period last year, mainly on account of lower trade deficit.
“India’s CAD at $ 7.1 billion (1.3 per cent of GDP) in Q3 of 2015-16 was lower than $ 7.7 billion (1.5 per cent of GDP) in Q3 of 2014-15 and $ 8.7 billion (1.7 per cent of GDP) in the preceding quarter,” the Reserve 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 per cent of GDP in April-December from 1.7 per cent 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”.