Current account deficit for the first quarter of FY2015-16 stood at USD 6.2 billion (1.2 per cent of GDP), sequentially higher than USD 1.5 billion in the previous quarter, the report by India Ratings & Research (Ind-Ra) said today.
The CAD, however, was lower than USD 7.9 billion the first quarter of FY2014-15.
Current account deficit reflects high outgo of forex and subsequently weakens the domestic currency.
Invisible receipts were mainly instrumental in improvement of Current Account Deficit (CAD) in the first quarter of current fiscal, it said.
In 2014-15, CAD stood at USD 27.9 billion or 1.3 per cent of the gross domestic product. In 2013-14 it was at USD 32.4 billion (1.7 per cent of GDP) and in 2012-13 at USD 88.1 billion (4.7 per cent of GDP).
Ind-Ra said merchandise exports contracted for the third consecutive quarter and a worrying trend is that the magnitude of the contraction has been increasing with each quarter.
"However, with Chinese economy slowing, there is also opportunity for India. But, much would depend on the policy support and how quickly Indian manufacturers scale up production to take advantage of this situation."
"However, the flip side of softer oil prices has been that it has impacted India's export growth as well."
Further, it said remittances by the Indian diaspora have been a stable source of foreign exchange for India and helped the country finance trade deficit.
"It has remained in excess of USD 16 billion continuously over the last nine quarters thus allaying the fear of remittances declining as a result of the global economic slowdown.