India's current account deficit narrows to $1.4 billion in December quarter as net services receipts rise

Mumbai: India’s current account deficit narrowed sharply to $1.4 billion or 0.2 percent of GDP in the December quarter, the Reserve Bank of India (RBI) said on Thursday.

#Breaking | Oct-Dec current account deficit 0.2% Of GDP Vs 2.7% (YoY) pic.twitter.com/FXaFwsJ2Ch

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The deficit was at 2.7 percent of the Gross Domestic Product (GDP) in the year-ago period and 0.9 percent in the preceding quarter. The sharp contraction was primarily due to a lower trade deficit at $34.6 billion, and a rise in net services receipts, the central bank said. [caption id=“attachment_4292949” align=“alignleft” width=“380”] Representational image. News 18.[/caption] “The contraction in the current account deficit or CAD (in 2019 Q4) was primarily on account of a lower trade deficit at $34.6 billion and a rise in net services receipts at $21.9 billion,” the RBI said in a statement. India’s monthly trade deficit, however, widened to $15.17 billion in January compared with $14.73 billion a year earlier, and sharply higher versus the deficit of $11.25 billion in December, trade ministry data last month showed. Data last month showed annual economic growth slowed to a more-than-six-year low of 4.7 percent in the December quarter. The CAD is a critical indicator of macroeconomic health and represents the gap between the overall foreign exchange expended and received in the economy. The data also comes on a day when the rupee depreciated to a 17-month low of 74.24 against the US dollar. For the first nine months of the fiscal year, the CAD has narrowed to 1 percent of the GDP.