Current account deficit widens to 3.1% in April-Dec 2010

Receipts from communication services pulled down India’s current account deficit (CAD) by almost 24 per cent to $9.7 billion in the quarter ended December 2010 from $12.2 billion in the corresponding quarter last year.

However, in the first nine months of financial year 2010-11, CAD widened to 3.1 per cent of GDP. In the last financial year, it stood at 2.9 per cent of GDP.

“Despite improvement in net invisibles surplus, the current account deficit widened during April-December 2010, mainly due to higher trade deficit, compared to the corresponding period of the last year,” said Reserve Bank of India in a release on India’s balance of payments data as on December 2010.

Communication services improved to $120 million in the third quarter of financial year 2010-11, compared with a deficit of $122 million in the same period last year. Financial services also showed an improvement of 72 per cent. This helped net invisibles soar 17 per cent against a decline of 19 per cent a year ago.

Exports recorded a growth of 39.8 per cent, while imports were rose 24.9 per cent in the third quarter. The trade deficit in absolute terms amounted to $31.6 billion, broadly the same as in the corresponding quarter of last year. Net services recorded a growth of 49.3 per cent, against a decline of 46 per cent a year ago, primarily owing to strong growth in receipts led by travel, transportation, software, business and financial services. Private transfer receipts remained buoyant at $14.1 billion during the quarter.Investment income improved from the previous quarter.