India's current account deficit narrows to 0.1% of GDP in Q4FY2016

CAD dips to 1.1% of GDP in 2015-16 from 1.8% in 2014-15

India's current account deficit (CAD) narrowed sharply to US$ 0.3 billion (0.1% of GDP) in Q4 of 2015-16, significantly lower than US$ 7.1 billion (1.3% of GDP) in Q3 of 2015-16 and marginally lower than US$ 0.7 billion (0.1% of GDP) in Q4 of 2014-15. The contraction in CAD was primarily on account of a lower trade deficit (US$ 24.8 billion) than in Q4 of last year (US$ 31.6 billion) and US$ 34.0 billion in the preceding quarter.

Net services receipts declined on a y-o-y basis largely due to fall in exports of transport, financial services and telecommunication, computer and information services.

Private transfer receipts, mainly representing remittances by Indians employed overseas, amounted to US$ 15.7 billion, a decline from their level in the preceding quarter as well as from a year ago.

Net foreign direct investment moderated to US$ 8.8 billion in Q4 of 2015-16 from US$ 9.3 billion in Q4 of 2014-15. Portfolio investment recorded a net outflow of US$ 1.5 billion in Q4 of 2015-16 as against a net inflow of US$ 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.

Foreign exchange reserves (on a BoP basis) increased by US$ 3.3 billion in Q4 of 2015-16.

BoP during April-March 2015-16

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 US$ 130.1 billion in 2015-16 from US$ 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 (US$ 36.0 billion) rose sharply by 15.3% over the level in 2014-15.

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

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

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