December quarter CAD up at 2% of GDP at $13.5 bn

The current account deficit( CAD) rose to 2 percent of gross domestic product( GDP) at $13.5 billion in the December quarter, up from $8 billion or 1.4 percent in the corresponding period last year, on the back of higher trade deficit. According to the Reserve Bank of India data, the CAD was $7.2 billion, or 1.1 percent of GDP, in the September quarter.

The current account deficit (CAD) rose to 2 per cent of the gross domestic product (GDP) at $13.5 billion in the December quarter, up from $8 billion or 1.4 per cent in the year-ago period, on the back of higher trade deficit, shows the Reserve Bank data.

The CAD, which shows the difference between foreign exchange earned and spent, stood at $7.2 billion or 1.1 per cent of GDP in the preceding September quarter, according to data released by the central bank on Friday.

"The widening of the CAD on a year-on-year basis is primarily due to a higher trade deficit which rose to $44.1 billion in the reporting quarter due to a larger increase in merchandise imports relative to exports," the central bank said.

On a cumulative basis, CAD more than doubled to 1.9 per cent of GDP in the April-December 2017 period from 0.7 per cent in the corresponding period of 2016-17 due to wider trade deficit, which increased to $118.9 billion from $82.7 billion.

Net services receipts rose 17.8 per cent during the reporting quarter mainly on the back of a rise in net earnings from software services and travel receipts.

Private transfer receipts, mainly representing remittances amounted to $17.6 billion, an increase of 16 per cent over a year ago. In the account, net foreign direct investment stood at $4.3 billion, 55 per cent less than an year ago. Net portfolio investment inflows were in the green at $5.3 billion in the third quarter, compare to an outflow of $11.3 billion in the year-ago period.