India Q3 current account deficit widens to $13.5 bn

Current Account Deficit rose at 2.0% of GDP in Q3 FY 2018.

Mumbai: Driven by higher imports, India`s current account deficit (CAD) widened to $13.5 billion during the third quarter of 2017-18 from $7.2 billion in the second quarter and $8 billion in the corresponding period in 2016-17, Reserve Bank of India (RBI) data showed on Friday.

"India`s CAD at $13.5 billion (2 percent of GDP) in Q3 of 2017-18 increased from $8 billion (1.4 percent of GDP) in Q3 of 2016-17 and $7.2 billion (1.1 percent of GDP) in the preceding quarter," the RBI said.

"The widening of the CAD on a year-on-year basis was primarily on account of a higher trade deficit brought about by a larger increase in merchandise imports relative to exports," the RBI said.

The capital and financial account surplus rose to $12.6 billion in the December quarter from $7.3 billion a year ago, bolstered by robust foreign portfolio inflows worth $5.3 billion during this period, the RBI said.

Despite the widening of the current account gap, the rupee currency outperformed most of its Asian peers in 2017, boosted by strong dollar inflows, but has become one of the region`s weakest, falling by 1.65 percent in 2018, as inflows slowed.

During the three months to December 2017, the forex kitty swelled by USD 9.4 billion (on balance of payment basis) as against a depletion of USD 1.2 billion in Q3 of FY17.

During this period, forex kitty saw an accretion USD 30.3 billion to the foreign exchange reserves.

Net FDI inflows during April-December 2017 declined to USD 23.7 billion from USD 30.6 billion, while net portfolio inflows stood at USD 19.8 billion during the period as against a net outflow of USD 3.2 billion a year ago.