Lower trade deficit narrowed India’s current account deficit to $4.6 billion in Q4 of 2018-19.
The Reserve Bank of India’s data on India’s Balance of Payments (BoP) showed that CAD narrowed from $13 billion in Q4 of 2017-18 and $17.7 billion in the preceding quarter.
“The contraction of the CAD on a year-on-year (y-o-y) basis was primarily on account of a lower trade deficit at $35.2 billion as compared with $41.6 billion a year ago,” RBI said.
“Net services receipts increased by 5.8 per cent on a y-o-y basis mainly on the back of a rise in net earnings from telecommunications, computer and information services.”
However, remittances declined by 0.9 per cent to $17.9 billion from their level during a year ago period.
In the financial account, net foreign direct investment was stagnant at $6.4 billion in Q4 of 2018-19.
“Foreign portfolio investment recorded net inflow of $9.4 billion in Q4 of 2018-19 – as compared with $2.3 billion in Q4 a year ago – on account of net purchases in both debt and equity market,” the apex bank said.
According to the data, there was an accretion of $14.2 billion in foreign exchange reserves (on BoP basis) during the period under review as compared with $13.2 billion in Q4 of 2017-18.
As per the data, for the full-fiscal 2018-19, India’s CAD increased to 2.1 per cent of GDP in 2018-19 from 1.8 per cent in 2017-18 on the back of wider trade deficit.
“India’s trade deficit increased to $180.3 billion in 2018-19 from $160.0 billion in 2017-18… Net invisible receipts were higher in 2018-19 mainly due to increase in net services earnings and private transfer receipts,” RBI said.
“Net FDI inflows at $30.7 billion in 2018-19 were marginally higher than $30.3 billion in 2017-18. Portfolio investment recorded a net outflow of $2.4 billion in 2018-19 as against an inflow of $22.1 billion a year ago.”
In addition, the data showed that in 2018-19, there was a depletion of $3.3 billion of the foreign exchange reserves (on a BoP basis).