India's Current Account Deficit Widens to 1.1% of GDP

Mumbai, Sep 30 (PTI) The country's current account deficit widened marginally to USD 9.7 billion or 1.1 per cent of GDP in April-June 2024, as against USD 8.9 billion or 1 per cent in the year-ago period, Reserve Bank of India said on Monday.

The crucial number representing the country's external sector strength has come on the heels of a surplus of USD 4.6 billion or 0.5 per cent of GDP recorded in the preceding January-March quarter.

The Reserve Bank attributed the year-on-year widening in current account deficit to a rise in merchandise trade gap which was recorded at USD 65.1 billion in Q1 FY25 as compared to USD 56.7 billion in the year-ago period.

Net services receipts increased to USD 39.7 billion during the quarter under review from USD 35.1 billion a year ago, the RBI said, adding that computer services, business services, travel services and transportation services have seen a rise.

However, there was a sharp moderation in the net foreign portfolio investment to USD 0.9 billion from USD 15.7 billion in the year ago, the RBI said.

Net inflows under external commercial borrowings (ECBs) came down to USD 1.8 billion during the first quarter, and was lower than USD 5.6 billion registered in the corresponding period a year ago.

In what can be seen as a jump in remittances by the diaspora, the private transfer receipts increased to USD 29.5 billion in Q1 FY25, from USD 27.1 billion witnessed in the same period of last fiscal.

Net foreign direct investment inflows increased to USD 6.3 billion from USD 4.7 billion on year, the RBI said.

Payments of investment income, captured under the net outgo on the primary income account, rose to USD 10.7 billion from the last year's USD 10.2 billion.

Non-resident deposits (NRI deposits) recorded net inflows of USD 4 billion, and was higher than USD 2.2 billion a year ago, the RBI said.

There was an accretion of USD 5.2 billion to the foreign exchange reserves on a BoP (balance of payments) basis in Q1 FY25 as compared to USD 24.4 billion in Q1 FY24, the RBI said.