India's current account deficit widens to 2.9% of GDP in Q2 of 2018-19

CAD rises to 2.7% of GDP in H1 of 2018-19

India's current account deficit (CAD) increased to US$ 19.1 billion (2.9% of GDP) in Q2 of 2018-19 increased from US$ 6.9 billion (1.1% of GDP) in Q2 of 2017-18 and US$ 15.9 billion (2.4% of GDP) in the preceding quarter.

The widening of the CAD on a year-on-year (y-o-y) basis was primarily on account of a higher trade deficit at US$ 50.0 billion as compared with US$ 32.5 billion a year ago.

Net services receipts increased by 10.2% on a y-o-y basis mainly on the back of a rise in net earnings from software and financial services.

Private transfer receipts, mainly representing remittances by Indians employed overseas, amounted to US$ 20.9 billion, increasing by 19.8% from their level a year ago.

In the financial account, net foreign direct investment at US$ 7.9 billion in Q2 of 2018-19 moderated from US$ 12.4 billion in Q2 of 2017-18.

Portfolio investment recorded net outflow of US$ 1.6 billion in Q2 of 2018-19 - as compared with an inflow of US$ 2.1 billion in Q2 last year - on account of net sales in both the debt and equity markets.

Net receipts on account of non-resident deposits increased to US$ 3.3 billion in Q2 of 2018-19 from US$ 0.7 billion a year ago.

In Q2 of 2018-19, there was a depletion of US$ 1.9 billion of the foreign exchange reserves (on BoP basis) as against an accretion of US$ 9.5 billion in Q2 of 2017-18.

BoP during April-September 2018 (H1 of 2018-19)

The CAD increased to 2.7% of GDP in H1 of 2018-19 from 1.8% in H1 of 2017-18 on the back of widening of the trade deficit. India's trade deficit increased to US$ 95.8 billion in H1 of 2018-19 from US$ 74.4 billion in H1 of 2017-18.

Net invisible receipts were higher in H1 of 2018-19 mainly due to increase in net services earnings and private transfer receipts.

Net FDI inflows in H1 of 2018-19 moderated to US$ 17.7 billion from US$ 19.6 billion in H1 of 2017-18.

Portfolio investment recorded a net outflow of US$ 9.8 billion in H1 of 2018-19 as against an inflow of US$ 14.5 billion a year ago.

In H1 of 2018-19, there was a depletion of US$ 13.2 billion of the foreign exchange reserves (on a BoP basis).

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