India Q2Fy22 current account deficit at 1.3% of GDP, likely to widen

Central bank says the deficit is mainly due to widening of trade gap and an increase in net outgo of investment income.

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Illustration: Binay Sinha
Abhijit Lele Mumbai
2 min read Last Updated : Jan 01 2022 | 12:57 AM IST
India’s current account balance posted a deficit of $ 9.6 billion in the second quarter ended September 2021 (Q2Fy22), forming 1.3 per cent of the country’s gross domestic product (GDP) and reflecting a rise in overseas trade.

The current account was in surplus $ 6.6 billion (0.9 percent of GDP) in the first quarter ended June 2021(Q1Fy22) and $ 15.3 billion (2.4 per cent of GDP) a year (Q1Fy21), said the Reserve Bank of India in a statement.

RBI said the current account deficit (CAD) in Q2Fy22 was mainly due to widening of trade gap to $ 44.4 billion from $ 30.7 billion in the preceding quarter and an increase in net outgo of investment income.

Aditi Nayar, chief economist at ICRA, said the current account deficit in Q2 FY2022 was somewhat smaller than the ratings agency’s expectation. A widening lies ahead, with the large merchandise trade deficits seen in October-November 2021. The current account deficit is expected to be in excess of $25 billion in Q3 Fy22, rivaling the size of the full year CAD in Fy20. For the year as a whole (Fy22), the CAD is likely to be at $40-45 billion, or around 1.4 per cent of GDP, Nayar said.

Net services receipts decreased marginally in Q2Fy22 over the previous quarter (Q1Fy22) but increased on a year-on-year (y-o-y) basis, on the back of robust performance of the exports of computer and business services.


Private transfer receipts, mainly representing remittances by Indians employed overseas, amounted to $ 21.1 billion, an increase of 3.7 per cent from their level a year ago, RBI said.

As for Balance of Payments (BoP) position in Q2Fy22, there was an accretion of $ 31.2 billion which also included Special Drawing Rights (SDR) allocation of $ 17.86 billion by the International Monetary Fund on August 23, 2021.

For April-September 2021 (H1Fy22), the country's current account deficit was 0.2 per cent of GDP as against a surplus of 3.0 per cent in (H1Fy21) on the back of a sharp increase in the trade deficit.

Net invisible receipts were higher in H1Fy22, on account of higher net receipts of services and private transfers.

Topics :india's current account deficitGDP

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