India's current account deficit widens to $13.5 bn during December quarter, RBI data shows

Mumbai: India's current account deficit (CAD) widened to $13.5 billion during the third quarter of 2017-18 from $7.2 billion in the second quarter and $8 billion in the corresponding period in 2016-17, Reserve Bank of India (RBI) data showed on Friday. "India's CAD at $13.5 billion (2 percent of GDP) in Q3 of 2017-18 increased from $8 billion (1.4 percent of GDP) in Q3 of 2016-17 and $7.2 billion (1.1 percent of GDP) in the preceding quarter," the RBI said.

"The widening of the CAD on a year-on-year (y-o-y) basis was primarily on account of a higher trade deficit ($44.1 billion) brought about by a larger increase in merchandise imports relative to exports." According to the RBI, net services receipts increased by 17.8 percent on a y-o-y basis mainly on the back of a rise in net earnings from software services and travel receipts.

CAD widened to $13.5 billion during December quarter. Reuters image.

"Private transfer receipts, mainly representing remittances by Indians employed overseas, amounted to $17.6 billion, increasing by 16 percent from their level a year ago," the RBI said.

"In the financial account, net foreign direct investment at $4.3 billion in Q3 of 2017-18 was lower than US$ 9.7 billion in Q3 of 2016-17. Portfolio investment recorded net inflow of $5.3 billion in Q3 of 2017-18 - as against an outflow of $11.3 billion in Q3 last year - on account of net purchases in both the debt and equity markets."

The RBI added that in Q3 2017-18, there was an accretion of $ 9.4 billion to the foreign exchange reserves (on BoP basis) as against depletion of $1.2 billion in Q3 of 2016-17.