Current account deficit rises to 2.1 pct in Q2 as gold imports soar

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Mumbai | Updated: December 8, 2014 9:13:15 PM

The current account deficit widened to 10.1 billion dollar or 2.1 per cent of GDP for the September quarter as against 1.2 per cent in the year-ago...

The current account deficit (CAD) is the net difference between inflows and outflows of foreign currencies. (Reuters)The current account deficit (CAD) is the net difference between inflows and outflows of foreign currencies. (Reuters)

The current account deficit widened to 10.1 billion dollar or 2.1 per cent of GDP for the September quarter as against 1.2 per cent in the year-ago period due to higher trade deficit, the Reserve Bank said today.

The current account deficit (CAD) is the net difference between inflows and outflows of foreign currencies.

“The increase in CAD was primarily on account of higher trade deficit contributed by both a deceleration in export growth and increase in imports,” the RBI said.

Merchandise exports growth dipped 4.9 per cent in the second quarter, while there was an 8.1 per cent surge in imports on higher inbound gold shipments.

For the first six months of 2014-15, the current account gap narrowed to 1.9 per cent or USD 17.9 billion from 3.1 per cent in the same period a year-ago, the RBI data showed.

There was a net accretion of USD 6.9 billion to the forex reserves during the reporting quarter as against a drawdown of USD 10.4 billion.

Net inflows of NRI deposits at USD 4.1 billion in Q2 were lower than the USD 8.2 billion notched up during the days of rupee fall in the year ago period, the RBI said.

External commercial borrowings by enterprises at USD 1.4 billion in were higher than USD 1.3 billion year-on-year.

CAD 1.2 per cent in the second quarter of the previous fiscal on unconventional moves to arrest the rupee slide. It stood at 1.7 per cent for the preceding June quarter this year.

On services, the net services improved by 3.4 per cent on a pick-up in telecommunications, computer and information services, the RBI said.

Net outflows under trade credits and advances were much lower at USD 0.2 billion as against USD 1.9 billion in the year ago period.

Net outflows on primary income, which includes profits, dividends and interest, were at USD 6.9 billion in Q2, up from the USD 6.3 billion in the year-ago period.

The gross private transfer receipts at USD 17.4 billion were marginally higher as compared with the corresponding quarter of 2013-14.

The FDI was stable, RBI said.

The boom in the markets resulted in the portfolio investments going into the positive territory on a net basis, the RBI said, adding that the portfolio investment stood at USD 9.8 billion for the quarter, as against the outflow of USD 6.6 billion in the last quarter.

On the loans front, there was a net outflow of USD 4.6 billion during the quarter due to higher repayments of overseas borrowings and a build-up of their overseas foreign currency assets, RBI said.

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