India's Current Account Balance Records Deficit Of $23.9 Billion

India's current account balance recorded a deficit of US$ 23.9 billion (2.8 per cent of GDP) in Q1:2022-23, up from US$ 13.4 billion (1.5 per cent of GDP) in Q4:2021-221 and a surplus of US$ 6.6 billion (0.9 per cent of GDP) a year ago [i.e., Q1:2021-22]. Underlying the current account deficit in Q1:2022-23 was the widening of the merchandise trade deficit to US$ 68.6 billion from US$ 54.5 billion in Q4:2021-22 and an increase in net outgo of investment income payments. Net services receipts increased, both sequentially and on a year-on-year (y-o-y) basis, on the back of rising exports of computer and business services. Services exports grew y-o-y by 35.4 per cent, led by broad-based growth in computer, business, transportation, and travel services.

Private transfer receipts, mainly representing remittances by Indians employed overseas, amounted to US$ 25.6 billion, an increase of 22.6 per cent from their level a year ago. Net outgo on the income account, primarily reflecting payments of investment income, increased to US$ 9.3 billion from US$ 7.5 billion a year ago. In the financial account, net foreign direct investment increased to US$ 13.6 billion from US$ 11.6 billion a year ago.Net foreign portfolio investment recorded outflows of US$ 14.6 billion as against net inflows of US$ 0.4 billion during Q1:2021-22. Net external commercial borrowings to India recorded an outflow of US$ 3.0 billion in Q1:2022-23 as against an inflow of US$0.2 billion a year ago. Non-resident deposits recorded net inflows of US$0.3 billion as compared with US$ 2.5 billion in Q1:2021-22. There was an accretion of US$ 4.6 billion to the foreign exchange reserves (on a BoP basis) in Q1:2022-23 as compared with US$ 31.9 billion in Q1:2021-22.