India’s current account deficit, a key indicator of the balance of payment position, fell down to $18.2 billion or 2.2 per cent of the GDP in the December quarter of the current fiscal, according to the Reserve Bank of India (RBI) data published on Friday.
The decline was mainly on the account of a narrowing merchandise trade deficit, which was $30.9 billion or 3.7 per cent of the GDP in the second quarter of 2022-23, the data showed.
The RBI said the Current Account Deficit (CAD) was USD 30.9 billion or 3.7 per cent of the GDP in Q2 of last financial year and at $22.2 billion or 2.7 per cent of the GDP in the December quarter of 2021-22.
“Underlying the lower current account deficit in Q3:2022-23 was a narrowing of merchandise trade deficit to $72.7 billion from USD 78.3 billion in Q2:2022-23, coupled with robust services and private transfer receipts,” RBI said.
According to the RBI data, the net services receipts increased both sequentially and on a year-on-year basis. Meanwhile, the services exports reported a growth of 24.5 per cent on a year-on-year (y-o-y) basis on the back of rising exports of software, business and travel services.
Private transfer receipts, mainly representing remittances by Indians employed overseas, amounted to $30.8 billion in the December quarter, an increase of 31.7 per cent from their level a year ago, the data showed.
In the December quarter, net foreign direct investment decreased to $2.1 billion from $4.6 billion in the year-ago period.
Net foreign portfolio investment reported inflows of $4.6 billion in the December quarter as against an outflow of $5.8 billion in the third quarter of 2021-22.
RBI said net outgo from the primary income account, mainly reflecting investment income payments, increased to $12.7 billion from $11.5 billion in the year-ago period.
Non-resident deposits recorded net inflows of $2.6 billion in the third quarter of the current fiscal as compared to net inflows of $1.3 billion in the year-ago period.
According to RBI data, India recorded a current account deficit of 2.7 per cent of GDP during April-December 2022 period as compared to a deficit of 1.1 per cent during April-December 2021 period.