India’s current account deficit (CAD) narrowed to $14.30 billion in the April-June 2019 quarter against $15.80 billion in the year ago quarter, primarily on account of higher invisible receipts.
As a percentage of GDP, CAD (which arises when a country’s total import of goods, services and transfers is greater than exports) in the reporting quarter (Q1) was lower at 2 per cent of gross domestic product (GDP) against 2.3 per cent in the year ago quarter.
CAD in the reporting quarter, however, was substantially higher vis-a-vis preceding quarter’s $4.6 billion (0.7 per cent of GDP). The RBI said invisible receipts were higher at $31.9 billion as compared with 29.9 billion a year ago. Net services receipts increased by 7.3 per cent on a year-on-year basis to $20.031 billion as per provisional data for the reporting quarter, mainly on the back of a rise in net earnings from travel, financial services and telecommunications, computer and information services.
Overseas remittances
Private transfer receipts, mainly representing remittances by Indians employed overseas, rose to $19.9 billion, increasing by 6.2 per cent from their level a year ago. In the financial account, net foreign direct investment (FDI) jumped to $13.9 billion in Q1 of 2019-20 against $9.6 billion in Q1 of 2018-19.
Foreign portfolio investment recorded net inflow of $4.8 billion in the reporting quarter against an outflow of $8.1 billion in Q1 last year on account of net purchases in both debt and equity markets, the RBI said.
Net inflow on account of external commercial borrowings to India was $6.3 billion in Q1 of 2019-20 against an outflow of $1.5 billion a year ago. Net receipts on account of non-resident deposits was lower at $2.754 billion in Q1 of 2019-20 when compared to $3.512 billion a year ago.