India’s current account slips into deficit in Q2, CAD now at 1.3% of GDP

The current account, which records the value of exports and imports of both goods and services along with international transfers of capital, was in a surplus mode both in the quarter-ago and year-ago periods.

India’s current account surplus had stood at USD 6.6 billion or 0.9 per cent of GDP in the April-June 2021 quarter, while in the year-ago period (Q2FY22), the surplus had stood at USD 15.3 billion or 2.4 per cent of the GDP, the data said.

For the first half of the fiscal year, India recorded a current account deficit of 0.2 per cent of GDP as against a surplus of 3 per cent in the year-ago period, on the back of a sharp increase in the trade deficit, the RBI said in the data on Balance of Payments.

In the reporting quarter, the deficit was mainly due to widening of trade deficit to USD 44.4 billion from USD 30.7 billion in the preceding quarter, and an increase in net outgo of investment income, the RBI said.

Net services receipts decreased marginally over the preceding quarter but increased on a year-on-year basis, on the back of robust performance of the exports of computer and business services, it added.

Private transfer receipts, which mainly represent remittances by Indians employed overseas, increased 3.7 per cent over the year-ago period to USD 21.1 billion, it said.

The net foreign direct investment (FDI) during the quarter recorded an inflow of USD 9.5 billion, much lower than the USD 24.4 billion a year ago, it said, adding that for the first half of the fiscal, the FDI inflows stood at USD 21.2 billion as against USD 23.9 billion for the year-ago period.

Net foreign portfolio investment during the September quarter was USD 3.9 billion as compared to USD 7 billion in the year-ago period. For the first half the fiscal, the portfolio investment recorded a net inflow of USD 4.3 billion which was lower than the USD 7.6 billion a year ago.

External commercial borrowings on a net basis recorded an inflow of USD 4.1 billion in the quarter, as against an outflow of USD 3.7 billion a year ago, while non-resident deposits recorded a net outflow of USD 0.8 billion as against an inflow of USD 1.9 billion in the year-ago period, the RBI said.

There was an accretion of USD 31.2 billion in the forex reserves on a BoP basis which included Special Drawing Rights allocation of USD 17.86 billion by the International Monetary Fund on August 23, it said.