Economy

Higher trade deficit pushes up Q3 CAD to 2% of GDP at $13.5 bn

The current account deficit (CAD) rose to 2% of the GDP or $13.5 billion in the December quarter, up from $8 billion or 1.4% in the year-ago period, on the back of higher trade deficit, according to Reserve Bank of India (RBI) data.

The CAD, which shows the difference between foreign exchange earned and spent, stood at $7.2 billion or 1.1% of gross domestic product (GDP) in the preceding September quarter, according to the data released by the central bank on Friday.

“The widening of the CAD on a year-on-year basis is primarily due to a higher trade deficit which rose to $44.1 billion in the reporting quarter due to a larger increase in merchandise imports relative to exports,” the central bank said in a statement.

On a cumulative basis, CAD more than doubled to 1.9% of GDP in the April-December 2017 period from 0.7% in the corresponding period of 2016-17 due to wider trade deficit, which increased to $118.9 billion from $82.7 billion.

Net services’ receipts rose 17.8% during the reporting quarter mainly on the back of a rise in net earnings from software services and travel receipts.

Private transfer receipts, mainly representing remittances, amounted to $17.6 billion, an increase of 16% from over a year ago.

In the financial account, net foreign direct investment stood at USD 4.3 billion, almost 55 per cent less than in the year-ago period when it was at USD 9.7 billion, the apex bank data showed.

However, net portfolio investment inflows were in the green at USD 5.3 billion in Q3, compare to an outflow of USD 11.3 billion in the year-ago period, due to net purchases in both the debt and equity markets.

Net receipts on account of non-resident deposits amounted to USD 3.1 billion in the reporting quarter as against net repayments of USD 18.5 billion a year ago.

During the three months to December 2017, the forex kitty swelled by USD 9.4 billion (on balance of payment basis) as against a depletion of USD 1.2 billion in Q3 of FY17.

During this period, forex kitty saw an accretion USD 30.3 billion to the foreign exchange reserves.

Net FDI inflows during April-December 2017 declined to USD 23.7 billion from USD 30.6 billion, while net portfolio inflows stood at USD 19.8 billion during the period as against a net outflow of USD 3.2 billion a year ago. PTI BEN DSK BAL BAL 03161934


Our code of editorial values

This article is closed for comments.
Please Email the Editor

Printable version | Oct 25, 2021 5:25:56 PM | https://www.thehindu.com/business/Economy/higher-trade-deficit-pushes-up-q3-cad-to-2-of-gdp-at-135-bn/article23274002.ece

Next Story