CAD widens to 2.9% of GDP during Q2 on large trade deficit; net services receipts increase by 10.2%
The CAD increased from $6.9 billion or 1.1 percent of GDP in the second quarter of 2017-18.
Mumbai: India's current account deficit (CAD) widened to 2.9 percent of the GDP in the second quarter of the fiscal as compared to 1.1 percent in the year-ago period, mainly due to a large trade deficit, the RBI said Friday.
The CAD, or the difference between outflow and inflow of foreign exchange in the country's current account, was $19.1 billion during the quarter ended 30 September, 2018.
It increased from $6.9 billion or 1.1 percent of GDP in the second quarter of 2017-18. The CAD stood at $15.9 billion (2.4 percent of GDP) in the April-June quarter.
"India's current account deficit (CAD) at $ 19.1 billion (2.9 percent of GDP) in Q2 of 2018-19 increased from $ 6.9 billion (1.1 percent of GDP) in Q2 of 2017-18 and $ 15.9 billion (2.4 percent of GDP) in the preceding quarter," the RBI said.
The CAD has increased to 2.7 percent of GDP in first half of 2018-19 from 1.8 percent in the corresponding period of 2017-18 on the back of widening of the trade deficit.
As per the central bank, the widening of the CAD on a year-on-year basis was primarily on account of a higher trade deficit at $50 billion as compared to $32.5 billion a year ago.
RBI's preliminary data on India's balance of payments (BoP) for July-September 2018-19 further revealed that net services receipts increased by 10.2 percent on a y-o-y basis, mainly on the back of a rise in net earnings from software and financial services.
Private transfer receipts, mainly representing remittances by Indians employed overseas, amounted to $20.9 billion during the quarter, increasing by 19.8 percent from their level a year ago.
In the financial account, net foreign direct investment at $7.9 billion in the second quarter of 2018-19 moderated from $12.4 billion in the similar period of last fiscal.
RBI said portfolio investment recorded net outflow of $1.6 billion as compared to an inflow of $2.1 billion in the second quarter last year on account of net sales in both the debt and equity markets.
Further, net receipts on account of non-resident deposits increased to $3.3 billion in the second quarter of 2018-19 from $0.7 billion a year ago.
In July-September this fiscal, there was a depletion of $1.9 billion of the foreign exchange reserves (on BoP basis) as against an accretion of $9.5 billion in the year ago period.
The current account deficit (CAD) narrowed sharply to just USD 300 million, or 0.1 per cent of GDP, in the June quarter, driven by lower trade deficit on deeper import contraction, the Reserve Bank said today.
The country's current account deficit (CAD), which had touched a record high of 4.2 percent last fiscal, is likely to moderate to 3.1 percent of GDP in the current financial year on the back of import moderation and the strengthening rupee.
According to the global financial services major, continued restrictions on gold imports and strong exports growth helped in keeping the monthly trade deficit of the country stable at an average of $11.6 billion during the April-July period.<br />