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India’s current account deficit (CAD) for the quarter ended March this year fell sharply to 0.2 per cent of gross domestic product ($1.2 billion) from 3.6 per cent ($18.1 billion) a year earlier, as the fall in imports was steeper than the drop in exports.
On the balance-of-payments (BoP) front, the March 2014 quarter saw accretion of $7.1 billion to foreign exchange reserves, against accretion of $2.7 billion in the year-ago period. In the December 2013 quarter, accretion stood at $19.1 billion.
For 2013-14, the CAD was 1.7 per cent ($32.4 billion), well within the Reserve Bank of India (RBI)’s comfort level of 2.5 per cent, against 4.7 per cent ($87.8 billion) for 2012-13. For 2013-14, the BoP was in positive territory, with a $15.5 billion rise in reserves, against a rise of $3.8 billion in 2012-13.
For the third consecutive time, RBI sprung a surprise by releasing CAD and BOP data ahead of the standard period of publication of such information.
In a statement, RBI said the low CAD for the March quarter was primarily due to a decline in the trade deficit, as the fall in imports was sharper than that in exports. While exports declined 1.3 per cent to $83.7 billion in the March quarter, merchandise imports declined 12.3 per cent to $114.3 billion, compared with a one per cent drop in the year-ago period.
The decline in imports was primarily led by a steep fall in gold imports, which stood at just $5.3 billion, significantly lower than $15.8 billion a year ago, RBI said. On the services trade front, at $19.6 billion, net services rose 15.6 per cent year-on-year in the March quarter.
At $6.4 billion, net outflow due to primary income (profit, dividend and interest) was higher in the March quarter, compared with $5.2 billion in the corresponding period of FY13. Gross private transfer receipts rose 3 per cent to $17.3 billion.
