India's current account deficit widens to $10.1 bn

India's current account deficit widened to $10.1 billion for the quarter ended Sep 31, 2014, data released by Reserve bank of India (RBI) showed.

According to the central bank, the net difference between inflows and outflows of foreign currencies also known as the current account showed a deficit that widened by 2.1 percent of the gross domestic product (GDP) from 1.2 percent in the corresponding quarter of last year.

"India's current account deficit (CAD) increased to $10.1 billion (2.1 percent of GDP) in Q2 of 2014-15 from $7.8 billion (1.7 percent of GDP) in the preceding quarter and $5.2 billion (1.2 per cent of GDP) in Q2 of 2013-14," the RBI said.

"The increase in CAD was primarily on account of higher trade deficit contributed by both a deceleration in export growth and increase in imports."

RBI said that merchandise export decelerated to 4.9 percent in the quarter under review from 11.9 per cent in Q2 of 2013-14.

However, for the first half of the fiscal, CAD narrowed to 1.9 percent or $17.9 billion from 3.1 percent in the corresponding period of previous fiscal.

There was a net accretion of $6.9 billion to the forex reserves during the reporting quarter as against a drawdown of $10.4 billion.

"Lower trade deficit coupled with a marginal rise in net services receipts moderated the CAD to $17.9 billion in H1 of 2014-15 (1.9 percent of GDP) from $26.9 billion in H1 of 2013-14 (3.1 percent of GD")," the central bank said."

"With a relatively higher growth in merchandise exports and marginal rise in merchandise imports, India's trade deficit narrowed to $73.2 billion in H1 of 2014-15 from $83.8 billion in H1 of 2013-14."