CAD inches up to 2.1% at $57.2 bn in FY19, but more than halves in Q4; net services receipts increase 5.8% to $21.3 bn

Mumbai: Current account deficit (CAD) increased to $57.2 billion or 2.1 percent of GDP in FY19 as against 1.8 percent in the previous year, the Reserve Bank of India (RBI) said on Friday. The CAD, which is the net of foreign exchange inflows and outflows, had stood at $48.7 billion in FY18. For FY19, the deficit widened despite a narrowing of the same in the March quarter to 0.7 percent of the Gross Domestic Product (GDP) or $4.6 billion, as against $27.7 billion or 2.7 percent in the December quarter and $13 billion or 1.8 percent in the March 2018 quarter, the central bank data showed. Overall trade performance was the prime influencer for both the contraction in CAD for the March quarter as well as a widening for the full year. A lower trade deficit of $35.2 billion in the March quarter, as compared to $41.6 billion in the year-ago period helped in CAD contraction, it said. [caption id=“attachment_4292949” align=“alignleft” width=“380”] Representational image. News 18.[/caption] Similarly, an increase in the trade deficit to $180.3 billion for the year as a whole as against $160 billion in the year-ago period led to the widening of the CAD in FY19, the central bank said. Net services receipts increased 5.8 percent to $21.3 billion on the back of a rise in net earnings from telecommunications, computer and information services during the March quarter. Private transfer receipts, representing mainly the remittances by expat Indians, declined by 0.9 percent to $17.9 billion in the March quarter, it said. It can be noted that inflows from the diaspora have been increasing for many years now, making the country the biggest beneficiary of remittances globally. The net foreign direct investment (FDI) stood at $6.4 billion in March quarter, the same level as the year-ago period, and rose marginally to $30.7 billion for the year as a whole. Foreign portfolio investment recorded net inflow of $9.4 billion in March quarter versus $2.3 billion in the year-ago period on account of net purchases in both debt and equity markets, the RBI said. However, for the entire year as a whole, net FPI flows dipped sharply to $2.4 billion as against $22.1 billion in the year-ago period. The net inflows on account of external commercial borrowings jumped to $7.2 billion in the March quarter from $1 billion a year ago. From a forex reserves perspective, there was a $3.3 billion depletion during the year, the central bank said.