India’s current account deficit fell to $18.2 bn in Dec quarter

India’s current account deficit declined to $18.2 billion in December quarter of the current fiscal from $30.9 billion in September quarter of 2022-23. According to balance of payment data released by the Reserve Bank of India (RBI) for the third quarter of the current financial year, underlying the lower current account deficit in the third quarter of 2022-23 was a narrowing of merchandise trade deficit to $72.7 billion from $78.3 billion in the second quarter of 2022-23, coupled with robust services and private transfer receipts. There was an accretion to foreign exchange reserves (on a Balance of Payment basis) to the tune of $11.1 billion in October quarter of 2022-23 as compared with an accretion of $0.5 billion in the corresponding period of 2021-22. Meanwhile the net foreign direct investment decreased to $2.1 billion from $4.6 billion a year ago, the data reported. Net foreign portfolio investment during the third quarter of 2022-23 recorded inflows of $4.6 billion, as against an outflow of $5.8 billion in the third quarter of 2021-22. Net external commercial borrowings to India recorded an outflow of $2.6 billion in December quarter of 2022-23 as compared with an outflow of $0.4 billion during the corresponding period of last year. Services exports reported a growth of 24.5 per cent on a year-on-year basis on the back of rising exports of software, business and travel services. Net services receipts increased both sequentially and on a y-o-y basis. Net outgo from the primary income account, mainly reflecting investment income payments, increased to $12.7 billion from $11.5 billion a year ago. Private transfer receipts, mainly representing remittances by Indians employed overseas, amounted to $30.8 billion, an increase of 31.7 per cent from their level a year ago.