CAD shrinks massively to 0.2% of GDP in Q4 of FY15

The country's current account deficit (CAD) narrowed sharply to USD 1.3 billion, or 0.2 per cent of GDP, in the fourth quarter of the last financial year on a sequential basis mainly on account of a lower trade gap.
The same shrank to 1.3 per cent of GDP for full financial year 2014-15.
"On a quarter-on-quarter basis, CAD narrowed sharply to USD 1.3 billion (0.2 per cent of GDP) in fourth quarter of financial year 2014-15 from USD 8.3 billion (1.6 per cent of GDP) in the third quarter," the Reserve Bank said today.
"The reduction in CAD in fourth quarter was primarily on account of lower trade deficit as net earnings through services and primary income (profit, dividend and interest) witnessed a decline in quarter-on-quarter terms though secondary income recorded a marginal increase of 0.4 per cent," the central bank said in its 'Developments in Balance of Payments' report.

On a year-on-year basis, however, CAD (which indicates imports of goods services and transfer are higher than their exports) in fourth quarter was a shade higher than USD 1.2 billion, or 0.2 per cent of GDP, in the same quarter of financial year 2013-14.
For the full fiscal (financial year 2014-15), the current account deficit shrank to USD 27.5 billion, or 1.3 per cent of GDP, from USD 32.4 billion, or 1.7 per cent of GDP, a year ago, RBI said.

Merchandise trade deficit at USD 31.7 billion in fourth quarter contracted sharply on a Q-o-Q basis on account of a larger decline in merchandise imports (13.4 per cent) than in merchandise exports (10.4 per cent).

However, in terms of Y-o-Y changes, the trade deficit in fourth quarter widened marginally as exports registered a larger decline (15.4 per cent) than imports (10.4 per cent).
"In financial year 2014-15, trade deficit narrowed to USD 144.2 billion from USD 147.6 billion last year," the data showed.
During the January-March period, on a balance of payment (BoP) basis, there was highest ever net accretion of USD 30.1 billion to the foreign exchange reserves in a single quarter.
"It was more than double the accretion in the preceding quarter and almost four times of the reserves accrued in fourth quarter, signifying record increase in capital inflows and dip in current account deficit," RBI said.