CAD narrows to 0.9 pc of GDP in Sept quarter on lower trade deficit: RBI

India's current account deficit (CAD) narrowed to 0.9 per cent of GDP, or USD 6.3 billion, in the September 2019 quarter, on account of lower trade deficit.

It had stood at 2.9 per cent of gross domestic product (GDP), or USD 19 billion, in the corresponding quarter of 2018-19.

On a sequential basis, CAD had printed 2 per cent of GDP, or USD 14.2 billion, in the June 2019 quarter.

The current account deficit is the difference between foreign exchange inflows and outflows.

"The contraction in the CAD was primarily on account of a lower trade deficit at USD 38.1 billion as compared with USD 50 billion a year ago," the Reserve Bank of India (RBI) said in a release on Tuesday.

During the first half of the current financial year, CAD narrowed to 1.5 per cent of GDP from 2.6 per cent in the corresponding period in 2018-19, on the back of a reduction in the trade deficit, which shrank to USD 84.3 billion as compared with USD 95.8 billion a year ago.

The trade deficit is the gap between the value of imports and exports.

The balance of payment stood at USD 5.12 billion in the second quarter and USD 19.10 billion during the first half of this fiscal.

Net foreign direct investment stood at USD 7.4 billion, almost the same level as in second quarter of 2018-19.

Helped by net purchases in the debt market, foreign portfolio investment recorded a net inflow of USD 2.5 billion in the September 2019 quarter, against an outflow of USD 1.6 billion a year ago.

In the April-September 2019 period, while the net FDI inflows were at USD 21.2 billion, portfolio investment recorded a net inflow of USD 7.3 billion.

Net services receipts increased 0.9 per cent on in July-September on a y-o-y basis, on the back of a rise in net earnings from computer, travel and financial services, the RBI said.

In the second quarter of 2019-20, private transfer receipts, mainly representing remittances by Indians employed overseas, rose to USD 21.9 billion, an increase of 5.2 per cent as against a year ago.

The net inflow on account of external commercial borrowings to the country was USD 3.2 billion in the second quarter as compared with USD 2 billion in corresponding period of the previous financial year.

There was a growth of USD 5.1 billion in the foreign exchange reserves in the September 2019 quarter, compared with a depletion of USD 1.9 billion a year ago.

During the first half of 2019-20, there was an accretion of USD 19.1 billion of the foreign exchange reserves, the RBI said.