Wednesday, May 18, 2022
HomeBusinessIndia's current account deficit widens to 2.7% of GDP in December quarter

India’s current account deficit widens to 2.7% of GDP in December quarter

MUMBAI: India’s current account deficit widened to $23 billion or 2.7 per cent of the GDP in the December quarter, the Reserve Bank said on Thursday.
The health of the current account, which is a key indicator of a country’s external strength, has deteriorated when compared to the preceding September quarter as well as the year-ago period.
The deficit was at $9.9 billion or 1.3 per cent of the GDP in the second quarter of the fiscal while the same stood at $2.2 billion or 0.3 per cent of the GDP in the year-ago period, the data on Balance of Payments showed.
For the first nine months of the fiscal, the current account deficit came at 1.2 per cent of the GDP as against a surplus of 1.7 per cent in the April-December 2020 period.
The widening of the current account deficit in the December quarter was attributed by the central bank to pressures on the trade deficit front with the gap on the goods front increasing to $60.4 billion as against $34.6 billion in the year-ago period due to rising imports.
Net services receipts increased, both sequentially and on a year-on-year (y-o-y) basis, on the back of robust performance of net exports of computer and business services.
Private transfer receipts, mainly representing remittances by Indians employed overseas, came at $23.4 billion, which is an increase of 13.1 per cent from their level a year ago, as per the data.
Net outgo from the primary income account, mainly reflecting net overseas investment income payments, increased to $11.7 billion, which is higher when compared to the preceding September quarter and also the year-ago period.
On the financial account front, the net foreign direct investment recorded an inflow of $5.1 billion, which is lower when compared to the $17.4 billion in the year-ago period.
Non-resident deposits recorded net inflow of $1.3 billion as compared to $3 billion in December quarter of last fiscal.
There was an accretion of $0.5 billion to the foreign exchange reserves on a BoP basis as compared to $32.5 billion in the year-ago period.
Rating agency Icra’s chief economist Aditi Nayar said the $23 billion deficit has undershot her expectation on a better than anticipated outcome for goods, services and secondary income.
Nayar said she expects the gap to narrow in the last quarter to $17-21 billion on the impact of the third wave on imports.
If the ongoing geopolitical tensions between Ukraine and Russia push up the average price of the Indian crude oil basket in FY23 to $105 per barrel, the current account deficit is projected to widen to $90-95 billion or 2.5 per cent of GDP in FY23, she added.
For the first nine months of the fiscal, the current account slipped into deficit on a more-than-doubling of the deficit in the goods trade to $135.6 billion as against $60.4 billion in the year-ago period.
Net FDI inflows at $26.5 billion in April-December 2021 were lower than $41.3 billion in April-December 2020, which saw huge investments in ventures promoted by Mukesh Ambani-led Reliance Industries.




Source link

RELATED ARTICLES

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Most Popular

Recent Comments

%d bloggers like this: