India's current account deficit rises to 2.1% of GDP in Q2 of 2014-15

There was a net accretion of US$ 6.9 billion to India's foreign exchange reserves in Q2 of 2014-15

India's current account deficit (CAD) increased to US$ 10.1 billion (2.1% of GDP) in Q2 of 2014-15 from US$ 7.8 billion (1.7% of GDP) in the preceding quarter and US$ 5.2 billion (1.2% of GDP) in Q2 of 2013-14. The increase in CAD was primarily on account of higher trade deficit contributed by both a deceleration in export growth and increase in imports.

On BoP basis, merchandise export growth decelerated to 4.9% in Q2 of 2014-15 from 11.9% in Q2 of 2013-14. On BoP basis, merchandise imports increased by 8.1% in Q2 of 2014-15 as against a decline of 4.8% in Q2 of 2013-14, largely due to a sharp rise in gold imports.

 

Net services receipts improved by 3.4% in Q2 of 2014-15 on a pick-up telecommunication, computer and information services from their level a year ago.

Net outflow on account of primary income (profit, dividend and interest) amounting to US$ 6.9 billion in Q2 of 2014-15 was higher than the corresponding quarter of 2013-14 (US$ 6.3 billion) as well as the preceding quarter (US$ 6.7 billion).

In Q2 of 2014-15, gross private transfer receipts at US$ 17.4 billion were marginally higher as compared with the corresponding quarter of 2013-14.

In the financial account, net flows through foreign direct investment were stable; however, portfolio investment recorded inflows of US$ 9.8 billion as against an outflow of US$ 6.6 billion in Q2 of 2013-14.

'Loans' (net) availed by deposit taking corporations (commercial banks) witnessed an outflow of US$ 4.6 billion in Q2 of 2014-15 owing to higher repayments of overseas borrowings and a build-up of their overseas foreign currency assets.

Under 'currency & deposits', net inflows of NRI deposits at US$ 4.1 billion were lower in Q2 of 2014-15 than US$ 8.2 billion in Q2 of 2013-14.

The amount of loans (net) of other sectors (i.e., external commercial borrowings) at US$ 1.4 billion was a shade higher than US$ 1.3 billion in Q2 of 2013-14.

Net outflow under trade credits and advances at US$ 0.2 billion was much lower than US$ 1.9 billion in Q2 of 2013-14 albeit there was net inflow in the preceding quarter.

On a BoP basis, there was a net accretion of US$ 6.9 billion to India's foreign exchange reserves in Q2 of 2014-15 as against a drawdown of US$ 10.4 billion in Q2 of 2013-14.

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