CAD, Remittances and net services up says RBI; CAD to GDP as percent declines to 2.4 percent in Q1 FY19

Last Updated: Sat, Sep 08, 2018 16:46 hrs
A man checks his phone outside the Reserve Bank of India (RBI) headquarters in Mumbai

India's current account deficit (CAD) as a percentage of GDP declined marginally to 2.4 per cent in the April-June quarter of 2018-19 against 2.5 per cent in the year-ago period, said data released by the Reserve Bank on Friday.

In value terms, CAD was higher at $ 15.8 billion in April-June this year as against $ 15 billion in the same quarter of 2017-18 mainly due to a higher trade deficit.

"India's current account deficit (CAD) stood at $ 15.8 billion (2.4 per cent of GDP) in Q1 of 2018-19 as compared with $ 15 billion (2.5 per cent of GDP) in Q1 of 2017-18," the RBI said on Developments in India's Balance of Payments (BoP).

The Indian currency is declining against the US dollar due to global factors as well as concerns on higher trade deficit on account of sustained high crude oil prices.

According to the data, net services receipts increased by 2.1% year-on-year mainly on the back of a rise in net earnings from software and financial services.

"Private transfer receipts, mainly representing remittances by Indians employed overseas, amounted to $ 18.8 billion, increasing by 16.9% from their level a year ago," the central bank added.

The data on BoP also revealed that net foreign direct investment at $ 9.7 billion in the first quarter of 2018-19 was higher than $ 7.1 billion in the year-ago period.

However, portfolio investment recorded net outflow of $ 8.1 billion in the first quarter of 2018-19 as compared to an inflow of $ 12.5 billion in the year-ago period on account of net sales in both the debt and equity markets, the RBI added.

Net receipts on account of non-resident deposits amounted to $ 3.5 billion in April-June, 2018-19, as compared with $ 1.2 billion a year ago.

There was a depletion of $ 11.3 billion of the foreign exchange reserves (on BoP basis) in the first quarter as against an accretion of $ 11.4 billion in the year-ago period.