India's current account deficit at $3.4 bn falls to 0.6 pc of GDP

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SME Times News Bureau | 14 Dec, 2016
India's current account deficit (CAD) for the second quarter ended September, at USD 3.4 billion, fell by over a percentage point to 0.6 percent of GDP on the back of a lower trade deficit, Reserve Bank of India (RBI) data showed on Tuesday.

The CAD in the corresponding quarter of the last fiscal at USD 8.5 billion was higher at 1.7 percent of GDP.

"The contraction in the CAD on year-on-year basis was primarily on account of lower trade deficit (USD 25.6 billion) brought about by a larger decline in merchandise imports relative to exports," the RBI said in a statement.

Private transfer receipts, mainly composed of remittances by Indians overseas, amounted to USD 15.2 billion, registering a decline by 10.7 percent from the level a year ago.

Non-resident Indian (NRI) deposits also registered a 50 percent decline to USD 2.1 billion, from USD 4.2 billion in the same quarter of the previous fiscal.

"In the financial account, net inflows of both foreign direct investment and portfolio investment were significantly higher in the second quarter," the RBI said.

For the first 6 months of the current fiscal, the CAD narrowed to 0.3 percent of GDP from 1.5 percent in the same period a year ago owing to a contraction in the trade deficit, said the central bank.

India's trade deficit narrowed to USD 49.5 billion in the first half, from USD 71.6 billion in the same period of the last fiscal.

Net foreign direct investment (FDI) inflows during 6 months rose by more than 28.8 percent over the level during the corresponding period of the previous year.

Portfolio investment recorded a net inflow of USD 8.2 billion as compared to a net outflow of USD 3.5 billion in the same period a year ago.

RBI also said thaat during the first half ended September, there was an accretion of USD 15.5 billion to foreign exchange reserves.