India’s current account deficit remains unchanged at 1.1% of GDP in Q3FY25

Current account deficit for Q3

India’s current account deficit was unchanged at 1.1 percent of the GDP, even as it rose in value terms to $11.5 billion in the third quarter of the year compared with $10.4 billion during a similar period last year.

The deficit narrowed compared with the second quarter, when current account deficit stood at 1.8 percent of the GDP.

India’s merchandise imports grew in the third quarter to $189 billion, but a pick in demand helped exports rise to $110 billion. Goods trade deficit was higher at $79 billion compared with $72 billion in the third quarter of previous fiscal.

The services trade balance helped contain the deficit.

"Net services receipts increased to $ 51.2 billion in Q3:2024-25 from $ 45.0 billion a year ago. Services exports have risen on a y-o-y basis across major categories such as business services, computer services, transportation services and travel services," RBI noted.

India's merchandise trade deficit reduced to a 42-month low of $14 billion in February, as both exports and imports dipped during the month.

"India’s CAD widened to $37.0 billion (1.3 per cent of GDP) during April-December 2024 from $30.6 billion (1.1 per cent of GDP) during April-December 2023 primarily on account of a higher merchandise trade deficit," the RBI said.

Net FDI inflows were lower in April-December period at $1.6 billion, so were portfolio inflows and other investments, but NRI deposits were higher.