Chennai: India’s current account deficit (CAD) narrowed sharply to $4.6 billion in the fourth quarter of FY19 from $13 billion in the year-ago period, said the Reserve Bank of India.
The reduction is a resultant of lowering of merchandise trade deficit, the apex bank said, adding that the number equals to 0.7 per cent of the gross domestic product (GDP). CAD in the previous quarter was $17.8 billion (2.7 per cent), it added.
“The contraction of the CAD on a year-on-year (y-o-y) basis (in Q4 FY19) was primarily on account of a lower trade deficit at $35.2 billion compared with $41.6 billion a year ago. Net services receipts increased by 5.8 per cent on a y-o-y basis mainly on the back of a rise in net earnings from telecom, computer and information services. Private transfer receipts, mainly representing remittances by Indians employed overseas, at $17.9 billion declined by 0.9 per cent from their level a year ago,” the RBI said.
The deficit was 2.1 per cent of GDP, up from 1.8 per cent in FY18. The first three quarters of last fiscal saw depletion of the reserves, aggregating $17.5 billion.
Further, portfolio inflows ($9.4 billion) and commercial borrowings by corporate India (net amount of $7.5 billion), the capital account saw a surplus of $19.2 billion during Q4 FY19, it said.
Merchandise exports grew just 3.9 per cent y-o-y in May, against 0.6 per cent in April, while imports inched up by 4.3 per cent, inflating trade deficit to a six-month peak of $15.36 billion. In April too, the deficit was at a five-month peak of $15.33 billion, the report said.
April saw net portfolio outflows of Rs 5,099 crore from debt markets but May and June saw net inflows of Rs 1,187 crore and Rs 8,319 crore, respectively. The previous quarter saw portfolio investors pull out $2.1 billion on a net basis from India.
Net foreign direct investment at $6.4 billion in Q4 FY19 remained at the same level as in Q4 FY18.