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A decline in merchandise imports helped the country narrow its current account deficit to 1.2 per cent of GDP in the first quarter of the current financial year compared with 1.6 per cent in the year ago period. The reduction in the CAD was also enabled by higher net earnings through services exports and lower outflow on account of primary income (profit, dividend and interest), according to RBI data on balance of payments
In absolute terms, the CAD, which arises when a country’s total import of goods, services and transfers is greater than exports, was at $6.2 billion in the April-June quarter, compared with $7.8 billion in the year ago quarter.
However, quarter-on-quarter, the CAD widened. In the January-March quarter, the CAD was at $1.3 billion (0.2 per cent of GDP).
In the reporting quarter, private transfer receipts, mainly representing remittances by Indians employed overseas, amounted to $16.2 billion, a marginal decline from their level a year ago. In the year ago period, gross private transfer receipts were at $17.5 billion. NRI deposits received by commercial banks doubled during the quarter at $5.9 billion.
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