Higher invisible receipts drives down CAD
India's current account deficit (CAD) at US$ 14.3 billion (2.0% of GDP) in Q1 of 2019-20 narrowed from US$ 15.8 billion (2.3% of GDP) in Q1 of 2018-19 but was higher than US$ 4.6 billion (0.7% of GDP) in the preceding quarter.The CAD contracted on a year-on-year (y-o-y) basis, primarily on account of higher invisible receipts at US$ 31.9 billion as compared with US$ 29.9 billion a year ago.
Net services receipts increased by 7.3% on a y-o-y basis, mainly on the back of a rise in net earnings from travel, financial services and telecommunications, computer and information services.
Private transfer receipts, mainly representing remittances by Indians employed overseas, rose to US$ 19.9 billion, increasing by 6.2% from their level a year ago.
In the financial account, net foreign direct investment was US$ 13.9 billion in Q1 of 2019-20 as compared with US$ 9.6 billion in Q1 of 2018-19.
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Foreign portfolio investment recorded net inflow of US$ 4.8 billion in Q1 of 2019-20 - as against an outflow of US$ 8.1 billion in Q1 of 2018-19 - on account of net purchases in both debt and equity markets.
Net inflow on account of external commercial borrowings to India was US$ 6.3 billion in Q1 of 2019-20 as against an outflow of US$ 1.5 billion a year ago.
In Q1 of 2019-20, there was an accretion of US$ 14.0 billion to the foreign exchange reserves (on BoP basis) as against a depletion of US$ 11.3 billion in Q1 of 2018-19.
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