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Current Account Deficit Widens To 1.9 Per Cent Of GDP In Q4 FY 2018

In the financial account, net foreign direct investment (FDI) at $6.4 billion in Q4 of 2017-18 was higher than $5 billion in Q4 of 2016-17.

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Current Account Deficit Widens To 1.9 Per Cent Of GDP In Q4 FY 2018

Widening of CAD on a year-on-year basis was primarily on account of a higher trade deficit

India's current account deficit (CAD) at $13.0 billion (1.9 per cent of GDP) in Q4 of 2017-18 rose from $ 2.6 billion (0.4 per cent of GDP) in Q4 of 2016 -17, but moderated marginally from US$ 13.7 billion (2.1 per cent of GDP) in the preceding quarter, shows the RBI (Reserve Bank of India) data. The widening of the CAD on a year-on-year (y-o-y) basis was primarily on account of a higher trade deficit ($ 41.6 billion) brought about by a larger increase in merchandise imports relative to exports.

Net services receipts increased by 8.8 per cent on a y-o-y basis mainly on the back of a rise in net earnings from software services and other business services. Private transfer receipts, mainly representing remittances by Indians employed overseas, amounted to $18.1 billion, increasing by 15.1 per cent from their level a year ago.

In the financial account, net foreign direct investment (FDI) at $6.4 billion in Q4 of 2017-18 was higher than $5 billion in Q4 of 2016-17. Portfolio investment recorded net inflow of $2.3 billion in Q4 of 2017-18 - as compared with an inflow of $10.8 billion in Q4 last year - on account of moderation in net purchases in both the debt and equity markets. Net receipts on account of non-resident deposits amounted to $4.6 billion in Q4 of 2017-18 as compared with $2.7 billion a year ago.

In Q4 of 2017-18, there was an accretion of $13.2 billion to the foreign exchange reserves (on BoP basis) as compared with an accretion of $7.3 billion in Q4 of 2016-17.


 

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