India’s CAD Dips To USD 10.5 Billion In October-December: RBI

India’s current account deficit declined to USD 10.5 billion or 1.2 percent of the GDP in the October-December quarter from USD 11.4 billion in the previous three months and USD 16.8 billion a year back, the Reserve Bank of India (RBI) said on Tuesday.

Net FDI inflow at USD 8.5 billion during April-December 2023 was lower than USD 21.6 billion during April-December 2022, it said.

Also, the accretion of foreign exchange reserves (on a BoP basis) was at USD 6.0 billion in October-December (the third quarter of the current financial year that ends on March 31) compared to an accretion of USD 11.1 billion a year ago.

The merchandise trade deficit at USD 71.6 billion was marginally higher than USD 71.3 billion during the third quarter of 2022-23. Services exports grew by 5.2 percent on a year-on-year basis on the back of rising exports of software, business, and travel services. Net services receipts increased both sequentially and from a year ago which helped cushion the current account deficit.

In the financial account, foreign direct investment recorded a net inflow of USD 4.2 billion, more than double of net inflow of USD 2.0 billion in Q3 of 2022-23.

Foreign portfolio investment recorded a net inflow of USD 12.0 billion in the quarter, higher than USD 4.6 billion a year back. External commercial borrowings to India recorded a net outflow of USD 2.6 billion in October-December as compared to a net outflow of USD 2.5 billion a year ago.

Non-resident deposits recorded a higher net inflow of USD 3.9 billion than USD 2.6 billion a year ago.

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