India's current account deficit widens to 1.1% of GDP in April-June 2024

The current account deficit stood at $9.7 billion, or 1.1 per cent of the GDP, in the fiscal first quarter, compared with a deficit of $8.9 billion or 1 per cent of GDP in the same quarter a year ago

The country's current account deficit widened marginally to $ 9.7 billion or 1.1 per cent of GDP in April-June 2024, as against $ 8.9 billion or 1 per cent in the year-ago period, Reserve Bank of India said on Monday.

The crucial number representing the country's external sector strength has come on the heels of a surplus of $ 4.6 billion or 0.5 per cent of GDP recorded in the preceding January-March quarter.

The Reserve Bank attributed the year-on-year widening in current account deficit to a rise in merchandise trade gap which was recorded at $ 65.1 billion in Q1 FY25 as compared to $ 56.7 billion in the year-ago period.

 

Net services receipts increased to $ 39.7 billion during the quarter under review from $ 35.1 billion a year ago, the RBI said, adding that computer services, business services, travel services and transportation services have seen a rise.

However, there was a sharp moderation in the net foreign portfolio investment to $ 0.9 billion from $ 15.7 billion in the year ago, the RBI said.

Net inflows under external commercial borrowings (ECBs) came down to $ 1.8 billion during the first quarter, and was lower than $ 5.6 billion registered in the corresponding period a year ago.

In what can be seen as a jump in remittances by the diaspora, the private transfer receipts increased to $ 29.5 billion in Q1 FY25, from $ 27.1 billion witnessed in the same period of last fiscal.

Net foreign direct investment inflows increased to $ 6.3 billion from $ 4.7 billion on year, the RBI said.

Payments of investment income, captured under the net outgo on the primary income account, rose to $ 10.7 billion from the last year's $ 10.2 billion.

Non-resident deposits (NRI deposits) recorded net inflows of $ 4 billion, and was higher than $ 2.2 billion a year ago, the RBI said.

There was an accretion of $ 5.2 billion to the foreign exchange reserves on a BoP (balance of payments) basis in Q1 FY25 as compared to $ 24.4 billion in Q1 FY24, the RBI said.