CAD shrinks to 1.2 % on higher earnings, trade deficit decline

“Private transfer receipts, mainly representing remittances by Indians employed overseas, amounted to $16.2 billion, a marginal decline from their level a year ago,” it said. In the financial account, net inflows of foreign direct investment were higher on a y-o-y basis, however, portfolio investment declined sharply, almost entirely in the debt segment, the RBI said.

Meanwhile, experts said CAD is likely to fall further in the current year and pick up next year. “As the situation stands today, we see the CAD/GDP in a sub-1 per cent zone in FY16, rising to 1.5 per cent in FY17 — within the comfort zone of the RBI. Despite recent trends on FPI not too comforting, we do not think there is any immediate worry for the BoP,” IDFC said in a report.