Mumbai: India's current account deficit, a key indicator of the country's external sector, declined to USD 18.2 billion or 2.2 percent of the GDP in the December quarter of the current fiscal. The decline was mainly due to narrowing of merchandise trade deficit, according to data released by the Reserve Bank of India (RBI) on Friday. The Current Account Deficit (CAD) was USD 30.9 billion or 3.7 percent of the GDP in the second quarter of 2022-23 and at USD 22.2 billion or 2.7 percent of the GDP in the December quarter of 2021-22.
"Underlying the lower current account deficit in Q3:2022-23 was a narrowing of merchandise trade deficit to USD 72.7 billion from USD 78.3 billion in Q2:2022-23, coupled with robust services and private transfer receipts," RBI said. Services exports reported a growth of 24.5 percent on a year-on-year (y-o-y) basis on the back of rising exports of software, business and travel services. Net services receipts increased both sequentially and, on a year-on-year basis.
In the December quarter, net foreign direct investment decreased to USD 2.1 billion from USD 4.6 billion in the year-ago period. Net foreign portfolio investment recorded inflows of USD 4.6 billion in the December quarter as against an outflow of USD 5.8 billion in the third quarter of 2021-22.
RBI said that net outgo from the primary income account, mainly reflecting investment income payments, increased to USD 12.7 billion from USD 11.5 billion in the year-ago period. Private transfer receipts, mainly representing remittances by Indians employed overseas, amounted to USD 30.8 billion in the December quarter, an increase of 31.7 percent from their level a year ago.
Non-resident deposits recorded net inflows of USD 2.6 billion in the third quarter of the current fiscal as compared to net inflows of USD 1.3 billion in the year-ago period. According to RBI data, India recorded a current account deficit of 2.7 percent of GDP during April-December 2022 period as compared to a deficit of 1.1 percent during April-December 2021 period.
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