Widening trade gap pushed up the country’s current account deficit to USD 36.4 billion or 4.4 per cent of the GDP in the second quarter of the current fiscal, as per data released by the Reserve Bank on Thursday.
India’s current account balance recorded a deficit of USD 36.4 billion in July-September 2022-23, up from USD 18.2 billion (2.2 per cent of GDP) in the first quarter of the fiscal and USD 9.7 billion (1.3 per cent of GDP) in the year ago period. “Underlying the current account deficit in Q2:2022-23 was the widening of the merchandise trade deficit to USD 83.5 billion from USD 63 billion in Q1:2022-23 and an increase in net outgo under investment income,” the RBI said.
It also said the current account deficit for April-June quarter of 2022-23 has been revised downwards due to downward adjustment in Customs data. “India recorded a current account deficit of 3.3 per cent of GDP in H1:2022-23 on the back of a sharp increase in the merchandise trade deficit, as compared with 0.2 per cent in H1:2021-22” the RBI added. Services exports reported a growth of 30.2 per cent on a year-on-year (y-o-y) basis on the back of rising exports of software, business and travel services. Net services receipts increased both sequentially and on a y-o-y basis.
Meanwhile, the RBI’s Financial Stability Report said the steady net inflows of foreign direct investment and the resumption of portfolio flows since July 2022 indicate that the CAD will be comfortably financed. Net outgo from the primary income account, mainly reflecting payments of investment income, increased to USD 12 billion from USD 9.8 billion a year ago, as per a statement on ‘Developments in India’s Balance of Payments (BoP) during the Second Quarter (July-September) of 2022-23’. “Private transfer receipts, mainly representing remittances by Indians employed overseas, amounted to USD 27.4 billion, an increase of 29.7 per cent from their level a year ago,” the statement added.
Also, net foreign portfolio investment recorded inflows of USD 6.5 billion, up from USD 3.9 billion during the second quarter of 2021-22. On BoP during April-September 2022 (H1:2022-23), it said net invisible receipts were higher on a y-o-y basis on account of higher net receipts of services and private transfers. Net FDI inflows at USD 20 billion in the first half of 2022-23 were comparable with USD 20.3 billion in the similar period of 2021-22. Portfolio investment recorded a net outflow of USD 8.1 billion as against an inflow of USD 4.3 billion in H1 of 2021-22.
In the first half of 2022-23, there was a depletion of USD 25.8 billion from the foreign exchange reserves (on a BoP basis). The depletion of foreign exchange reserves was to the tune of USD 30.4 billion in July-September quarter of 2022-23 as against an accretion of USD 31.2 billion in the year-ago period.
Pingback: PHDCCI pitches for increasing health budget by 30-40 pc