: India’s current account deficit widens to 2.7% of GDP #FinanceIndia #StockMarketNEWS #Business Press Trust of India Mumbai India’s current account deficit widened to US$ 23 billion or 2.

@StockMarketNEWS Mon 04 Apr, 2022

Posted in: #FinanceIndia #StockMarketNEWS #Business

India’s current account deficit widens to 2.7% of GDP #FinanceIndia #StockMarketNEWS #Business
Press Trust of India

Mumbai

India’s current account deficit widened to US$ 23 billion or 2. 7$ of the gross domestic product (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 US$ 9. 9 billion or 1. 3% of the GDP in the second quarter of the fiscal while the same stood at US$ 2. 2 billion or 0. 3% 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% of the GDP as against a surplus of 1. 7% 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 US$ 60. 4 billion as against US$ 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 US$ 23. 4 billion, which is an increase of 13. 1% 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 US$ 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 US$ 5. 1 billion, which is lower when compared to the US$ 17. 4 billion in the year-ago period.

Non-resident deposits recorded net inflow of US$ 1. 3 billion as compared to US$ 3 billion in December quarter of last fiscal.

There was an accretion of US$ 0. 5 billion to the foreign exchange reserves on a BoP basis as compared to US$ 32. 5 billion in the year-ago period. Rating agency Investment Information and Credit Rating Agency of India Limited (Icra)’s chief economist Aditi Nayar said the US$ 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 US$ 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 US$ 105 per barrel, the current account deficit is projected to widen to US$ 90-95 billion or 2.