India’s Current Account Deficit Widens To $23.9 Billion Of GDP In Q1 Of FY23: RBI
India’s current account deficit (CAD), a key indicator of the balance of payment position, widened to 2.8 per cent of GDP at $23.9 billion in the first quarter of the current financial year, mainly on account of a higher trade deficit.
According to the data released by the Reserve Bank on India’s (RBI’s) Balance of Payments during the First Quarter (April-June) of 2022-23, the current account balance recorded a deficit of $23.9 billion (2.8 per cent of GDP) in the first quarter, up from $13.4 billion (1.5 per cent of GDP) in January-March period of the last fiscal year.
India’s current account surplus stood at $6.6 billion, equivalent to 0.9 per cent of GDP in the first quarter (April-June) of 2021-22.
“Underlying the current account deficit in Q1:2022-23 was the widening of the merchandise trade deficit to $68.6 billion from $54.5 billion in Q4:2021-22 and an increase in net outgo of investment income payments,” the RBI said. It also said net services receipts increased, both sequentially and on a year-on-year (Y-o-Y) basis, on the back of rising exports of computer and business services.
According to the RBI data, services exports grew YoY by 35.4 per cent, led by broad-based growth in computer, business, transportation, and travel services.
Private transfer receipts, mainly representing remittances by Indians employed overseas, amounted to $$ 25.6 billion, an increase of 22.6 per cent from their level a year ago. Net outgo on the income account, primarily reflecting payments of investment income, increased to $9.3 billion from $7.5 billion a year ago. In the financial account, net foreign direct investment (FDI) increased to $13.6 billion from $11.6 billion a year ago.
Net foreign portfolio investment recorded outflows of $14.6 billion as against net inflows of $ 0.4 billion during Q1:2021-22. Net external commercial borrowings to India recorded an outflow of $ 3.0 billion in Q1:2022-23 as against an inflow of $0.2 billion a year ago.
Meanwhile, the central bank is likely to hike rates by 50 basis points for the third time in a row as the rupee’s plunge to a record low this month complicates the battle against inflation, according to economists. The MPC, headed by Governor Shaktikanta Das, is scheduled to meet during September 28-30 and the decision will be announced on Friday.
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