India's current account deficit widens to 2.0% of GDP in Q3 of 2017-18

Foreign exchange reserves saw an accretion of US$ 30.3 billion in April-December 2017

India's current account deficit (CAD) at US$ 13.5 billion (2.0% of GDP) in Q3 of 2017-18 increased from US$ 8.0 billion (1.4% of GDP) in Q3 of 2016-17 and US$ 7.2 billion (1.1% of GDP) in the preceding quarter.

The widening of the CAD on a year-on-year (y-o-y) basis was primarily on account of a higher trade deficit (US$ 44.1 billion) brought about by a larger increase in merchandise imports relative to exports.

Net services receipts increased by 17.8% on a y-o-y basis mainly on the back of a rise in net earnings from software services and travel receipts.

 

Private transfer receipts, mainly representing remittances by Indians employed overseas, amounted to US$ 17.6 billion, increasing by 16.0% from their level a year ago.

In the financial account, net foreign direct investment at US$ 4.3 billion in Q3 of 2017-18 was lower than US$ 9.7 billion in Q3 of 2016-17.

Portfolio investment recorded net inflow of US$ 5.3 billion in Q3 of 2017-18 - as against an outflow of US$ 11.3 billion in Q3 last year - on account of net purchases in both the debt and equity markets.

Net receipts on account of non-resident deposits amounted to US$ 3.1 billion in Q3 of 2017-18 as against net repayments of US$ 18.5 billion a year ago.

In Q3 of 2017-18, there was an accretion of US$ 9.4 billion to the foreign exchange reserves (on BoP basis) as against depletion of US$ 1.2 billion in Q3 of 2016-17.

BoP during April-December 2017

On a cumulative basis, the CAD increased to 1.9% of GDP in April-December 2017 from 0.7% in the corresponding period of 2016-17 on the back of a widening of the trade deficit.

India's trade deficit increased to US$ 118.9 billion in April-December 2017 from US$ 82.7 billion in April-December 2016.

Net invisible receipts were higher in April-December 2017 mainly due to increase in net services earnings and private transfer receipts.

Net FDI inflows during April-December 2017 moderated to US$ 23.7 billion from US$ 30.6 billion during the corresponding period of the previous year.

Portfolio investment recorded a net inflow of US$ 19.8 billion during April-December 2017 as against a net outflow of US$ 3.2 billion a year ago.

In April-December 2017, there was an accretion of US$ 30.3 billion to the foreign exchange reserves.

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