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India’s current account balance recorded a deficit of $10.5 billion (1.2% of GDP) in Q3 FY24, lower than $16.8 billion (2.0% of GDP) a year earlier and $11.4 billion (1.3% of GDP) in Q2 FY24, as per data released by the Reserve Bank of India (RBI) on Tuesday.
The current account deficit as per cent of GDP for Q2 FY24 underwent an upward revision to 1.3% from 1% earlier due to an upward adjustment of customs data on merchandise imports, the RBI said.
The merchandise trade deficit at $71.6 billion was marginally higher than $71.3 billion during Q3 FY23. Services exports grew by 5.2% on a year-on-year (YoY) basis on the back of rising exports of software, business and travel services, data showed.
“Net services receipts increased both sequentially and from a year ago that helped cushion the current account deficit,” the RBI said.
Net outgo on the primary income account, primarily reflecting payments of investment income, increased to $13.2 billion from $12.7 billion a year earlier. Private transfer receipts, mainly representing remittances by Indians employed overseas, amounted to $31.4 billion, up 2.1% over same period a year earlier.
In the financial account, foreign direct investment recorded a net inflow of $4.2 billion as compared with a net inflow of $2.0 billion in Q3 FY23.
Foreign portfolio investment recorded a net inflow of $12.0 billion, higher than $4.6 billion during Q3 FY23.
The RBI said external commercial borrowings to India recorded a net outflow of $2.6 billion in Q3 FY24 as compared with a net outflow of $2.5 billion a year earlier.
Non-resident deposits recorded a higher net inflow of $3.9 billion than $2.6 billion a year earlier.
BoP April-December 2023
India’s current account deficit moderated to 1.2% of GDP during April-December 2023 from 2.6% of GDP in the same period a year earlier on the back of a lower merchandise trade deficit.
Net invisibles receipts were higher during April-December 2023 than a year earlier, primarily on account of services and transfers.
Net FDI inflow at $8.5 billion during April-December 2023 was lower than $21.6 billion during April-December 2022.
During April-December 2023, portfolio investment recorded a net inflow of $32.7 billion as against an outflow of $3.5 billion during the same period a year earlier, as per RBI data.
In April-December 2023, there was an accretion of $32.9 billion to the foreign exchange reserves (on a BoP basis that excludes valuation effects).
