The Reserve Bank of India (RBI) has said the country's current account deficit (CAD) narrowed sharply to $1.4 billion, or 0.2 per cent of GDP, for the December 2019 quarter. The deficit had stood at 2.7 per cent in the corresponding quarter a year ago and 0.9 per cent in the previous quarter. The sharp contraction in the deficit was mainly on account of a lower trade deficit of $34.6 billion, and a rise in net services receipts. It said that for the first nine months of the financial year, the CAD has narrowed to 1 per cent. The CAD measures the difference between the value of a country's imported and exported goods and services.
The said that during the December 2019 quarter, the trade deficit narrowed to $34.6 billion as against $49.3 billion for the same period a year ago. The dip was largely driven by a correction in imports. On the services front, the net earnings increased to $21.9 billion, which was marginally higher as compared to the $21.7 billion in the year-ago period. The RBI said the receipts increased on the back of a rise in net earnings from computer, travel and financial services.
It said that the private transfer receipts rose 9 per cent to $20.6 billion for the quarter. The net foreign direct investment was also higher at $10 billion in the December 2019 quarter, as against $7.3 billion in the year-ago period. Foreign portfolio investments recorded a net inflow of $7.8 billion as against an outflow of $2.1 billion last year on account of net purchases in both the debt and equity market.
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