The current account deficit (CAD) for India widened for the third quarter as compared to the early year. It was driven by higher imports revealed a data from India’s monetary body Reserve Bank of India.
As per RBI, the current CAD was at $13.5 billion dollars. It is 2 percent rise in Gross Domestic Product (GDP) as compared to the previous year of 1.4 percent. There is a sharp rise 8.0 billion as compared to the second quarter of $7.2 billion. The percent rise is 0.3 percent. In the first three quarters, it widened by 1.9 percent than the previous year of 2016-17.
The RBI said,” The widening of the CAD on a year-on-year basis was primarily on account of a higher trade deficit at $44.1 billion brought about by a larger increase in merchandise imports relative to exports.”
The backing of rising net earnings from travel receipts and software services saw the net services receipts jump to 17.8 percent, i.e., year on year basis.
However, private transfer receipts, mainly representing remittances by Indians employed overseas amounted to $ 17.6 billion, increasing by 16.0 percent from their level a year ago. In the financial account, net foreign direct investment at $ 4.3 billion was lower in Q3 of 2017-18 as compared to $ 9.7 billion previous year.
“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 said.
The country witnessed more non-resident Indian deposits during the third quarter. Net receipts NRI accounts deposits amounted to $3.1 billion in Q3 of 2017-18 as against net repayments of $ 18.5 billion a year ago. There was an increase of $ 9.4 billion in foreign exchange reserves while it was in losses of $ 1.2 billion in Q3 of 2016-17.
The RBI said India’s trade deficit increased to $ 118.9 billion in April-December 2017 from $82.7 billion in April-December 2016. Net invisible receipts were higher in April-December 2017 mainly due to increase in net services earnings and private transfer receipts. Net FDI inflows during April-December 2017 moderated to $23.7 billion from $30.6 billion during the corresponding period of the previous year.
Foreign exchange reserves in nominal terms increased by $39.1 billion during April-December 2017 as against the depletion of $1.3 billion during the same period of the preceding year, the RBI added.