Current account deficit narrows to 0.1% of GDP in Q4

FY16 CAD at 1.1% of GDP as against 1.8% in FY15; outlook for rupee improves

India's current account deficit in the January-March quarter narrowed to $300 million, or 0.1% of gross domestic product, from $7.1 billion, or 1.3% of GDP in the previous quarter, the central bank said on Thursday.

The CAD narrowed to 1.1% of GDP in 2015-16 from 1.8% in 2014-15, on the back of contraction in the trade deficit.

India's trade deficit narrowed to $130.1 billion in 2015-16 from $144.9 billion in 2014-15.

Net invisible receipts declined in 2015-16, primarily reflecting moderation in both net services earnings and private transfer receipts.

Net FDI inflows during 2015-16 ($36 billion) rose sharply by 15.3% over the level in 2014-15.

Portfolio investment, however, recorded a net outflow $4.5 billion in 2015-16 as against a net inflow of $40.9 billion last year.

In 2015-16, there was an accretion of $17.9 billion to foreign exchange reserves (on a BoP basis) as compared with $61.4 billion in 2014-15.

The balance of payments surplus in January-March was $3.3 billion, compared to a surplus of $4.1 billion in October-December, according to the Reserve Bank of India.

Net foreign direct investment moderated to $8.8 billion in Q4 of 2015-16 from $9.3 billion in Q4 of 2014-15. Portfolio investment recorded a net outflow of $1.5 billion in Q4 of 2015-16 as against a net inflow of $12.5 billion in the corresponding period of last year; primarily reflecting net outflow in the debt segment.

Non-resident Indian (NRI) deposits, however, increased in Q4 of 2015-16 over their level in Q4 last year as well as the preceding quarter.