India's current account deficit widens to four-year high of 2.4% in April-June 2017 quarter

Net services receipts improves 15.7% on the back of a rise in net earnings from travel, construction and other business services

India's current account deficit (CAD) surged to US$ 14.3 billion (2.4% of GDP) in Q1 of 2017-18, rising sharply from US$ 0.4 billion (0.1% of GDP) in Q1 of 2016 -17 and US$ 3.4 billion (0.6% of GDP) in Q4 of 2016-17. The widening of the CAD on a year-on-year (y-o-y) basis was primarily on account of a higher trade deficit (US$ 41.2 billion) brought about by a larger increase in merchandise imports relative to exports.

Net services receipts increased by 15.7% on a y-o-y basis mainly on the back of a rise in net earnings from travel, construction and other business services. Private transfer receipts, mainly representing remittances by Indians employed overseas, at US$ 16.1 billion increased by 5.3% over the corresponding quarter of previous year.

In the financial account, net foreign direct investment at US$ 7.2 billion in Q1 of 2017-18 almost doubled from its level in Q1 of 2016-17.

Net portfolio investment recorded substantial inflow of US$ 12.5 billion in Q1 of 2017-18, primarily in the debt segment, as compared with US$ 2.1 billion in Q1 of last year.

Net receipts on account of non-resident deposits amounted to US$ 1.2 billion in Q1 of 2017-18; this was lower than US$ 1.4 billion a year ago.

In Q1 of 2017-18, there was an accretion of US$ 11.4 billion to the foreign exchange reserves (on BoP basis) as compared with US$ 7.0 billion in Q1 of 2016-17 and US$ 7.3 billion in the preceding quarter.

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