India’s Q2 current account deficit falls to 1.6 percent of GDP

Mumbai, Dec 22 (IANS) India’s current account deficit (CAD) fell to 1.6 percent of its gross domestic product at $8.2 billion in the second quarter ended September, compared to $10.9 billion in the same quarter of last fiscal, mainly owing to a lower trade deficit, data showed on Tuesday.

“The contraction in CAD was primarily on account of lower trade deficit ($37.4 billion) as compared with $39.7 billion in Q2 of last year though it was higher than the level in the preceding quarter ($34.2 billion),” Reserve Bank of India said here releasing the second quarterly balance of payments figures.

CAD in consideration was however higher than the 1.2 percent of GDP registered for the previous quarter of the current fiscal.

“Although net services receipts moderated marginally on a annual basis largely due to fall in export receipts in transport, insurance and pension services, there has been some improvement over the preceding quarter,” RBI said.

The CAD during the first six months of the fiscal narrowed to 1.4 percent of GDP, from 1.8 percent in the same period of the previous year on contraction in the trade deficit and a marginal improvement in net invisibles.

The trade deficit in the first half narrowed to $71.6 billion from $74.7 billion in the same period a year ago.

The RBI said foreign direct investment (FDI) also slowed during the second quarter to $15.1 billion from $16.7 billion in the previous quarter.

Portfolio investments saw a net outflow of $6.5 billion against a net inflow of $9.8 billion in the corresponding period a year ago.

NRI deposits during the quarter, however, increased 4 percent to $6.5 billion.

India’s central bank said that after a sharp rise in the first quarter, net FDI moderated in second quarter of 2015-16.

Net FDI inflows in the first half of current fiscal rose by more than 10 percent over the level during the same period of the previous year.

Foreign exchange reserves on a balance of payment basis also fell by $0.9 billion in the second quarter of the current fiscal.

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