The current account deficit soared to USD 3.4 billion, or 0.6 per cent of gross domestic product (GDP), in the fourth quarter of fiscal 2017, from USD 0.3 billion a year ago, the Reserve Bank said today. However, on a sequential basis, the gap between forex earnings and expenses, narrowed from USD 8 billion in the third quarter of FY17. “The widening of the CAD on a year-on-year basis was primarily on account of a higher trade deficit which stood at USD 29.7 billion, brought about by a larger increase in merchandise imports relative to exports,” RBI said. Balance of payments for the full financial year stood at USD 21.6 billion, while for Q4 the same stood at USD7.31 billion, according to RBI data. For the full fiscal 2017, CAD narrowed to 0.7 per cent of GDP from 1.1 per cent in the year ago period on the back of a contraction in trade deficit. In the previous fiscal, trade deficit narrowed to USD 112.4 billion from USD 130.1 billion in 2015-16. While in the fourth quarter, net foreign direct investment moderated to USD 5 billion. Net portfolio investment recorded substantial inflow of USD 10.8 billion in both equity and debt segment, as against net outflow of USD 1.5 billion in the same quarter of FY16.
In FY17, gross FDI inflows stood at USD 60.2 billion, higher than USD 55.6 billion in 2015-16, while net FDI inflows in 2016-17 was at USD 35.6 billion as against USD 36 billion in 2015-16.
Portfolio investment recorded a net inflow of USD 7.6 billion in 2016-17 as against an outflow of USD 4.5 billion a year ago. In fiscal 2017, there was an accretion of USD 21.6 billion to the foreign exchange reserves as compared with USD 17.9 billion in 2015-16.