SME Times News Bureau | 08 Dec, 2018
current account deficit (CAD) to $19.1 billion during the second quarter of
2018-19 from $15.9 billion in the preceding quarter and $6.9 billion in the
corresponding period of 2017-18, the Reserve Bank of India (RBI) data showed on
CAD at $19.1 billion (2.9 per cent of GDP) in Q2 of 2018-19 increased from $6.9
billion (1.1 per cent of GDP) in Q2 of 2017-18 and $15.9 billion (2.4 per cent
of GDP) in the preceding quarter," the RBI said in its statement.
crude oil prices and gold imports are major factors behind the rise in CAD.
widening of the CAD on a year-on-year (y-o-y) basis was primarily on account of
a higher trade deficit at $50 billion as compared with $32.5 billion a year
ago," it added.
According to the RBI, net services receipts increased by 10.2 per cent on a
y-o-y basis mainly on the back of a rise in net earnings from software and
"Private transfer receipts, mainly representing remittances by Indians
employed overseas, amounted to $20.9 billion, increasing by 19.8 per cent from
their level a year ago," the RBI said.
"In the financial account, net foreign direct investment at $7.9 billion
in Q2 of 2018-19 moderated from $12.4 billion in Q2 of 2017-18."
In addition, the portfolio investment recorded net outflow of $1.6 billion in
Q2 of 2018-19 -- as compared with an inflow of $2.1 billion in Q2 last year --
on account of net sales in both the debt and equity markets.
"Net receipts on account of non-resident deposits increased to $3.3
billion in Q2 of 2018-19 from $0.7 billion a year ago," the central bank
The RBI added that in Q2 2018-19, there was an depletion of $1.9 billion in the
foreign exchange reserves (on BoP basis) as against an accretion of US$ 9.5
billion in Q2 of 2017-18.
"The current account deficit for Q2 FY2019 came in at the lower end of our
forecast range of $19-21 billion, benefiting from substantial remittances. The
widening in the current account deficit in Q2 FY2019, from the modest level in
Q2 FY2018, was led by higher crude oil prices and gold imports," said ICRA
Principal Economist Aditi Nayar.
"While the subsequent correction in crude oil prices has eased concerns
regarding the size of the import bill in H2 FY19, it may result in a moderation
in remittances. On balance, ICRA forecasts India's current account deficit at
$68-73 billion or 2.6 per cent of GDP for FY2019."