India's current account deficit (CAD) widened slightly to $9.7 billion, or 1.1% of GDP, in the April-June quarter of 2024, compared to $8.9 billion (1%) in the same period last year, the Reserve Bank of India (RBI) said Monday.
This comes after a surplus of $4.6 billion, or 0.5% of GDP, in the preceding January-March quarter. The increase in the CAD was mainly attributed to a rise in the merchandise trade deficit, which stood at $65.1 billion in Q1 FY25, up from $56.7 billion a year earlier, the RBI noted.
Net services receipts saw growth, reaching $39.7 billion, driven by increased earnings from computer services, business services, travel, and transportation sectors.
However, foreign portfolio investment witnessed a sharp decline, with net inflows dropping to $0.9 billion from $15.7 billion in the corresponding period last year. External commercial borrowings also fell, with net inflows down to $1.8 billion from $5.6 billion.
Private transfer receipts, which include remittances from overseas, surged to $29.5 billion, up from $27.1 billion a year ago. Net foreign direct investment inflows increased to $6.3 billion, compared to $4.7 billion in the previous year.
Investment income payments rose to $10.7 billion, up from $10.2 billion last year. Non-resident Indian (NRI) deposits saw net inflows of $4 billion, significantly higher than the $2.2 billion recorded in the same period in FY24.
On a balance of payments (BoP) basis, there was an addition of $5.2 billion to India’s foreign exchange reserves in Q1 FY25, compared to an increase of $24.4 billion in the same period last year, the RBI said.
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