The Reserve Bank of India (RBI) in its data on balance of payments, has said that India's current account deficit (CAD) narrowed to $10.5 billion or 1.2 per cent of GDP in the October-December quarter (Q3FY24) as against $11.4 billion or 1.3 per cent in the preceding three months ending September. The narrowing in the CAD was much sharper when compared to $16.8 billion or 2 per cent for the October-December 2022 period. For the first nine months of the fiscal, CAD has moderated to 1.2 per cent of GDP from 2.6 per cent of GDP in the corresponding period a year ago on the back of a lower merchandise trade deficit.
According to the data, the merchandise trade deficit at $71.6 billion for the December quarter was marginally higher than $71.3 billion in the year-ago period. Services exports grew by 5.2 per cent on a year-on-year basis on the back of rising exports of software, business and travel services. Net services receipts increased to $45 billion from $38.7 billion in the year-ago period to help cushion the current account deficit. Private transfer receipts, mainly representing remittances by Indians employed overseas, came at $31.4 billion, which is an increase of 2.1 per cent over the level during the year ago period.
It further stated that foreign direct investment recorded a net inflow of $4.2 billion as compared to a net inflow of $2 billion in the December quarter last year, while the foreign portfolio investment recorded a net inflow of $12 billion, which is much higher than the $4.6 billion in the year-ago period. External commercial borrowings recorded a net outflow of $2.6 billion in the December quarter of FY24, which was marginally wider than the net outflow of $2.5 billion in the year ago period. Non-resident deposits recorded a higher net inflow of $3.9 billion than $2.6 billion a year ago. There was an accretion of foreign exchange reserves (on a BoP basis) to the tune of $6 billion as compared to an accretion of $11.1 billion in the year-ago period.
