India’s current account deficit (CAD) declined sequentially to 0.2 per cent of gross domestic product (GDP) in the March 2023 quarter (Q4 of FY23) from 2 per cent of GDP in the December quarter of FY23. This was mainly due to a moderation in the trade deficit coupled with robust services exports.
The CAD was also lower in Q4 of FY23 compared to 1.6 per cent of GDP in the March 2022 quarter (Q4 of FY22), according to Reserve Bank of India (RBI) data.
The CAD widened to 2 per cent of GDP in FY23 compared to 1.2 per cent in FY22. This came as an uptick in merchandise imports due to higher global commodity prices led to the widening of merchandise trade deficit, RBI said.
Referring to the quarterly deficit, Barclays, in a research report, said, “The CAD (in March quarter) printed a tad higher than expected (our expectation was for a small surplus) due to a slightly higher goods deficit, a lower-than-expected services trade surplus and secondary income.”
Net services receipts increased, both sequentially and on a year-on-year (YoY) basis, on the back of a rise in net earnings from computer services.
Private transfer receipts, mainly representing remittances by Indians employed overseas, increased to $28.6 billion, up by 20.8 per cent from their level a year ago, RBI added.