India's current account deficit widens to $23.9 billion or 2.8% of GDP in April-June

Representative image: Reuters

India's current account deficit (CAD) widened to $23.9 billion in April-June from $13.4 billion in January-March, according to data released by the Reserve Bank of India (RBI) on September 29.

The current account had recorded a surplus of $6.6 billion in April-June 2021.

In percentage terms, the CAD in April-June 2022 was 2.8 percent of GDP, up from 1.5 percent of GDP the previous quarter.

Underlying the current account deficit in April-June was the widening of the merchandise trade deficit to $68.6 billion from $54.5 billion in January-March and an increase in net outgo of investment income payments, the RBI said in the release.

The current account records the value of exports and imports of both goods and services and international transfers of capital between two countries.

According to data released on September 29, net services receipts increased, both sequentially and on a year-on-year basis, on the back of rising exports of computer and business services. Services exports grew by 35.4 percent on year, led by broad-based growth in computer, business, transportation, and travel services, said the RBI.

Private transfer receipts, mainly representing remittances by Indians employed overseas, amounted to $25.6 billion in April-June, an increase of 22.6 percent from their level a year ago.

In the financial account, net foreign direct investment increased to $13.6 billion in the reporting quarter from $11.6 billion a year ago. Net foreign portfolio investment recorded outflows of $14.6 billion as against net inflows of $0.4 billion during April-June 2021, according to the data.

Net external commercial borrowings to India recorded an outflow of $3 billion in April-June as against an inflow of $0.2 billion a year ago.

There was an accretion of $4.6 billion to India’s foreign exchange reserves on a balance of payment basis in April-June as compared with $31.9 billion last year.

Meanwhile, India’s external debt was placed at $617.1 billion as of June end, recording a decrease of $2.5 billion over its level at the end of March.