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Current Account Deficit Narrows To 2.2% Of GDP In Q3: RBI Data

The decline was mainly due to narrowing of merchandise trade deficit, according to data released by the Reserve Bank of India (RBI) on Friday

India's current account deficit, a key indicator of the country's external sector, declined to $18.2 billion or 2.2 per cent of the GDP in the December quarter of the current fiscal.

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The decline was mainly due to narrowing of merchandise trade deficit, according to data released by the Reserve Bank of India (RBI) on Friday.

The Current Account Deficit (CAD) was $30.9 billion or 3.7 per cent of the GDP in the second quarter of 2022-23 and at $22.2 billion or 2.7 per cent of the GDP in the December quarter of 2021-22.

"Underlying the lower current account deficit in Q3:2022-23 was a narrowing of merchandise trade deficit to $72.7 billion from $78.3 billion in Q2:2022-23, coupled with robust services and private transfer receipts," RBI said.

Services exports reported a growth of 24.5 per cent on a year-on-year (y-o-y) basis on the back of rising exports of software, business and travel services. Net services receipts increased both sequentially and on a year-on-year basis.

In the December quarter, net foreign direct investment decreased to $2.1 billion from $4.6 billion in the year-ago period.

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Net foreign portfolio investment recorded inflows of $4.6 billion in the December quarter as against an outflow of $5.8 billion in the third quarter of 2021-22.

RBI said net outgo from the primary income account, mainly reflecting investment income payments, increased to $12.7 billion from $11.5 billion in the year-ago period.

Private transfer receipts, mainly representing remittances by Indians employed overseas, amounted to $30.8 billion in the December quarter, an increase of 31.7 per cent from their level a year ago.

Non-resident deposits recorded net inflows of $2.6 billion in the third quarter of the current fiscal as compared to net inflows of $1.3 billion in the year-ago period.

According to RBI data, India recorded a current account deficit of 2.7 per cent of GDP during April-December 2022 period as compared to a deficit of 1.1 per cent during April-December 2021 period.
 

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