India's current account deficit was its highest in at least 30 years in the March quarter, as surging imports and moderate export growth pushed up the trade deficit, keeping the balance of payments in deficit for the second quarter in a row.
Hefty oil and gold imports weighed on India's external position during the quarter, although economists said they expect the data to improve in the June quarter as oil prices fell and gold imports eased.
India's balance of payments deficit was $5.7 billion in the first three months of 2012, an improvement on the $12.8 billion deficit in the December quarter.
In the March quarter of 2011, the balance of payments was in surplus of $2 billion, RBI data showed.
"Despite the slowdown in economic activity and rupee depreciation, growth in merchandise imports moderated only mildly from 27.7 per cent in Q4 of 2010-11 to 22.6 per cent in Q4 of 2011-12, reflecting inelastic demand for gold and oil," the Reserve Bank of India said on Friday.
The country's current account deficit was $21.7 billion in the March quarter, or 4.5 percent of GDP, the highest since at least the June quarter of 1982, according to Reuters EcoWin data. The deficit was $6.3 billion in the same quarter a year earlier, Reserve Bank of India data showed.
For the full fiscal year of 2011/12 that ended in March, the current account deficit was $78.2 billion or 4.2 percent of GDP, deeper than the $46 billion deficit in 2010/11, the RBI said.
In the December quarter, the current account deficit was $19.95 billion.
"I expect the (current account) deficit to reduce over the next two quarters due to lower oil prices, and slower gold imports," said D.K. Joshi, chief economist at CRISIL, adding that he expects the current account deficit for the current fiscal year at 3.6 percent of GDP.
India's trade deficit in the March quarter stood at $51.6 billion, from a $48.7 billion d eficit i n the December quarter and a $30 billion deficit a year earlier.
The widening current account gap in 2011/12 was "largely reflecting higher trade deficit on account of subdued external demand and relatively inelastic imports of POL (petroleum, oil and lubricants) and gold and silver," the RBI said.