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India's CAD widens to $13.5 billion in October-December quarter of FY18

Raising concerns over the fiscal condition, the Reserve Bank of India's (RBI) latest data has showed that India's current account deficit (CAD) , which is the difference between foreign exchange spent and earned, widened sharply to $13.5 billion or 2% of Gross Domestic Product (GDP) in the October-December quarter (Q3) of fiscal year 2017-18, from $8.0 billion (1.4% of GDP) in the corresponding quarter of the previous year and $7.2 billion (1.1% of GDP) in the preceding quarter.

The RBI in its release said that the widening of the CAD on a year-on-year basis was primarily on account of a higher trade deficit brought about by increase in imports relative to exports. India's trade deficit increased to $118.9 billion in April-December 2017 from $82.7 billion in the same period of 2016. As per the data, on a cumulative basis, the CAD increased to 1.9% of GDP in April-December 2017 from 0.7% in the corresponding period of 2016-17 on the back of a widening of the trade deficit.

The Central Bank said that the capital and financial account surplus rose to $12.6 billion in the December quarter from $7.3 billion a year ago, bolstered by robust foreign portfolio inflows worth $5.3 billion during this period. Private transfer receipts representing remittances by Indians employed overseas, amounted to $17.6 billion, surging by 16.0% from their level a year ago. 

Besides, net invisible receipts were higher in April-December 2017 mainly due to increase in net services earnings and private transfer receipts, while net Foreign Direct Investment (FDI) inflows during April-December 2017 moderated to $23.7 billion from $30.6 billion during the corresponding period of the previous year.

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