CAD narrowed to 1.5% of GDP in H1 of 2019-20 from 2.6% in H1 of 2018-19
India's Current Account Deficit (CAD) at US$ 6.3 billion (0.9% of GDP) in Q2 of 2019-20 narrowed from US$ 19.0 billion (2.9% of GDP) in Q2 of 2018-19 and US$ 14.2 billion (2.0% of GDP) in the preceding quarter.The contraction in the CAD was primarily on account of a lower trade deficit at US$ 38.1 billion as compared with US$ 50.0 billion a year ago.
Net services receipts increased by 0.9% on a y-o-y basis, on the back of a rise in net earnings from computer, travel and financial services.
Private transfer receipts, mainly representing remittances by Indians employed overseas, rose to US$ 21.9 billion, increasing by 5.2% from their level a year ago.
In the financial account, net foreign direct investment was US$ 7.4 billion, almost same level as in Q2 of 2018-19.
Foreign portfolio investment recorded net inflow of US$ 2.5 billion - as against an outflow of US$ 1.6 billion in Q2 of 2018-19 - on account of net purchases in the debt market.
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Net inflow on account of external commercial borrowings to India was US$ 3.2 billion as compared with US$ 2.0 billion in Q2 of 2018-19.
There was an accretion of US$ 5.1 billion to the foreign exchange reserves (on BoP basis) as against a depletion of US$ 1.9 billion in Q2 of 2018-19.
BoP during April-September 2019-20 (H1 of 2019-20)
The CAD narrowed to 1.5% of GDP in H1 of 2019-20 from 2.6% in H1 of 2018-19 on the back of a reduction in the trade deficit which shrank to US$ 84.3 billion in H1 of 2019-20 from US$ 95.8 billion in H1 of 2018-19.
Net invisible receipts were higher in H1 of 2019-20 mainly due to increase in net services earnings and private transfer receipts.
Net FDI inflows at US$ 21.2 billion in H1 of 2019-20 were higher than US$ 17.0 billion in H1 of 2018-19.
Portfolio investment recorded a net inflow of US$ 7.3 billion in H1 of 2019-20 as against an outflow of US$ 9.8 billion a year ago.
In H1 of 2019-20, there was an accretion of US$ 19.1 billion of the foreign exchange reserves (on a BoP basis).
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