The Reserve Bank of India (RBI) said on Tuesday that India’s current account deficit decreased from $11.4 billion to $10.5 billion, or 1.2% of GDP, in the October–December quarter.
In the same quarter last year, the current account deficit, or CAD, which is the difference between a nation’s imports and exports of both goods and services, was $16.8 billion, or 2% of GDP.
Owing to an upward revision of customs statistics on merchandise imports, the central bank updated the currency rate for the second quarter to 1.3% from 1% first reported. The merchandise trade deficit increased from $64.5 billion to $71.6 billion in Q3FY23. As a result, the current account deficit has shrunk and the trade balance has narrowed between the second and third quarters.
“Services exports grew by 5.2 per cent on a y-o-y basis on the back of rising exports of software, business and travel services,” stated central bank in the statement.
“Consistent positive surprises on both goods and services exports reflect resilient global demand and another healthy print of CAD/GDP of 1.2% for 3QFY24 and FY24 CAD/GDP ratio likely tracking 0.8% or lower,” stated Madhavi Arora, lead economist at Emkay Global. “More crucially, structural notable changes in net services exports have given fillip to external sector — with software exports holding up well and net non-software exports led by professional consulting services likely to surge by over 55% YoY in FY24.”
In the meantime, net inflows from foreign direct investment were $4.2 billion as opposed to $2 billion in the third quarter of 2022–2023.
In 3QFY24, foreign portfolio investments saw a net inflow of $12 billion, up from $4.6 billion the previous year.
In the third quarter of this fiscal year, there was a net outflow of $2.6 billion from external commercial borrowings, as opposed to a net outflow of $2.5 billion the previous year.
