India's current account deficit at 4-year high, widens sharply to 2.4% in April-June quarter

New Delhi: The current account deficit soared to USD 14.3 billion, or 2.4 percent of gross domestic product (GDP), in the first quarter of fiscal 2018, from USD 0.4 billion a year ago, the Reserve Bank said on Friday.

It is also higher than USD 3.4 billion or 0.6 percent recorded in the quarter ended March.

“The widening of the CAD on a year-on-year basis was primarily on account of a higher trade deficit which stood at USD 41.2 billion, brought about by a larger increase in merchandise imports relative to exports,” RBI said.

Net services receipts increased by 15.7 percent mainly on the back of a rise in net earnings from travel, construction and other business services.

According to RBI data, private transfer receipts, mainly representing remittances by Indians employed overseas, amounted to USD 16.1 billion, registering an increase of 5.3 percent as compared to the previous level a year ago.

In the financial account, net foreign direct investment stood at USD 7.2 billion almost doubled from its level during the same period a year ago.

Net portfolio investment recorded substantial inflow of USD 12.5 billion in Q1, primarily in the debt segment, as compared with USD 2.1 billion in Q1 of last year.

Net receipts on account of non-resident deposits amounted to USD 1.2 billion in Q1 of 2017-18; this was lower than USD 1.4 billion a year ago.

In Q1 of 2017-18, there was an accretion of USD 11.4 billion to the foreign exchange reserves (on BoP basis) as compared with USD 7.0 billion in Q1 of 2016-17 and USD 7.3 billion in the preceding quarter.