India experienced a reduction in its current account deficit during the July-September quarter of the ongoing fiscal year, primarily attributed to a decrease in merchandise trade deficit and a surge in services exports, as detailed by the Reserve Bank of India (RBI) on Tuesday.
During the second quarter of 2023-24, the current account deficit (CAD) amounted to $8.3 billion or 1% of GDP, down from $9.2 billion or 1.1% of GDP in the previous quarter. A notable contrast emerges when comparing this to the $30.9 billion or 3.8% of GDP registered in the corresponding quarter of the previous year.
This reduction in the merchandise trade deficit to $61 billion from $78.3 billion in the year-ago quarter was pivotal. The decline was significantly influenced by lower crude prices, resulting in a contraction of the country's oil import bill.
The RBI highlighted a 4.2% year-on-year growth in services exports, primarily driven by increased exports in software, business, and travel services. This contributed to the sequential and annual growth in net services receipts.
Furthermore, private transfer receipts, largely stemming from remittances by Indians employed overseas, totaled $28.1 billion, marking a 2.6% increase from the corresponding period in the previous year.
NRI deposits witnessed a net inflow of $3.2 billion in the second quarter of the ongoing financial year, compared to $2.5 billion in the same period of 2022-23.
A noteworthy shift was observed in the foreign exchange reserves, with an accumulation of $2.5 billion during Q2: 2023-24, in contrast to a depletion of $30.4 billion in Q2: 2022-23, based on the Balance of Payments (BoP) analysis.
(With Agency Inputs)
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