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10-Sep2018

India's CAD eases marginally to 2.4% of GDP in Q1FY19: RBI

The Reserve Bank of India (RBI) in its Developments in India's Balance of Payments (BoP) during the Q1 (April-June) of 2018-19, has stated that the country's current account deficit (CAD) as a percentage of Gross Domestic Product (GDP) eased marginally to 2.4% in Q1FY19 against 2.5% in the same quarter of previous year. However, in value terms, the CAD was higher at $15.8 billion in April-June this year as against $15 billion in the same quarter of 2017-18 mainly due to a higher trade deficit.

The central bank stated that trade deficit stood at $45.7 billion as compared with $41.9 billion a year ago. The Indian currency is declining against the US dollar due to global factors as well as concerns on higher trade deficit on account of sustained high crude oil prices. As per the data, net services receipts rose 2.1% year-on-year mainly on the back of a rise in net earnings from software and financial services. Private transfer receipts, mainly representing remittances by Indians employed overseas, amounted to $18.8 billion, rising by 16.9% from their level a year ago.

The data on BoP also revealed that net foreign direct investment at $9.7 billion in the first quarter of 2018-19 was higher than $7.1 billion in the year-ago period. However, portfolio investment recorded net outflow of $8.1 billion in the first quarter of 2018-19 as compared with an inflow of $12.5 billion in the year-ago period on account of net sales in both the debt and equity markets. Net receipts on account of non-resident deposits amounted to $3.5 billion in April-June, 2018-19, as compared with $1.2 billion a year ago.



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