India’s current account deficit (CAD) increased to 2.1 per cent or USD 57.2 billion of the GDP in FY19 as against previous year’s 1.8 per cent, the Reserve Bank of India said on Friday. CAD, which is the net of foreign exchange inflows and outflows, stood at USD 48.7 billion in FY18.
The central bank’s data showed that the CAD widened in FY19 despite narrowing in March quarter to 0.7 per cent or USD 4.6 billion of the GDP as against December quarter’s 2.7 per cent or USD 27.7 billion of the GDP.
The RBI said the overall trade performance was the prime influencer for the contraction and widening of the CAD in both the March and December quarters.
The contraction was a result of a lower trade deficit of USD 35.2 billion in the March quarter compared to USD 41.6 billion the previous year. Similarly, the widening in the CAD was a result of an increase in the trade deficit from USD 180.3 billion to USD 160 billion in the last year, RBI added.
The net earnings from telecommunications, and computer and information services increased from 5.8 per cent to USD 21.3 billion in the March quarter.
Private transfer receipts, on the other hand, declined by 0.9 per cent to USD 17.9 billion in the March quarter. Private transfer receipts represent the payments by expat Indians.
India’s net foreign direct investment (FDI) for the March quarter stood at USD 6.4 billion and rose marginally to USD 30.7 billion for the year as a whole. Foreign portfolio investment recorded a net flow of USD 9.4 billion in March, as compared to USD 2.3 billion in the previous year, on account of net purchases in both debt and equity markets.
However, the FPI flows dipped for the entire year as a whole by USD 2.4 billion as against USD 22.1 billion last year.
The net inflows on account of external commercial borrowings jumped to USD 7.2 billion in the March quarter from USD 1 billion a year ago. From a forex reserves perspective, there was a USD 3.3 billion depletion during the year, the central bank said.
(With PTI inputs)
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