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India’s current account deficit was down to $16.55 billion in the April-June quarter of the current fiscal from $21.76 billion in the immediately preceding January-March quarter. The data was released by the RBI on Friday evening,
The current account deficit moderation was due to sharp decline in imports compared with exports, the effect of a slowing economy. Imports declined by 3.6 per cent while exports declined by 2.6 per cent in Q1. The GDP growth rate, according to experts, is expected to be around 5.5 per cent this year.
Experts attribute the slight improvement in the current account deficit to the fact that oil and gold prices were on a downward trajectory in Q1. Brent crude prices, which were at $123 a barrel at the beginning of April had fallen to about $97 a barrel at the end of June. Gold prices too were a shade soft in that period.
Current account deficit as a proportion of GDP rose a tad higher to 3.9 per cent compared with 3.8 per cent a year ago. This metric had gone up sharply in the year-ago period.
Trade deficit
The RBI said that in absolute terms, the trade deficit on a balance of payments basis amounted to $42.5 billion, which was lower than the corresponding quarter of the previous year ($44.9 billion). However, as a percentage of GDP, the trade deficit widened to 10 per cent during the quarter as compared with 9.8 per cent in Q1 of the previous year.
The RBI said that net export of services witnessed a decline of 13 per cent during Q1 of 2012-13 over Q1 of 2011-12 mainly due to lower growth in receipts led by ‘transportation’, ‘travel’, ‘construction’, ‘insurance & pension services’ and ‘other business services’.
It said net inflows under the capital and financial account witnessed a decline primarily on account of moderation in foreign direct investment (FDI) inflows and loans by banks and non-banks. India’s balance of payments accounts showed a slight surplus at $0.5 billion in the April-June quarter compared to the deficit of $5.7 billion in the preceding quarter.
> vageesh.nagarajan@thehindu.co.in
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