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Current account deficit swells to 9 year high of $36.4 billion in Q2

finance | Dec 29, 2022 5:48 PM IST

Current account deficit swells to 9-year high of $36.4 billion in Q2

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India's current account deficit (CAD) of $36.4 billion (4.4% of GDP) was double the $18.2 billion (2.2 percent of GDP) posted in the first quarter of this fiscal and nearly four times of what it was in the second quarter of FY22.

India's current account deficit widened to a 9-year high of $36.4 billion, or 4.4 percent of GDP, in the second quarter of the current financial year, mainly on account of a higher trade deficit.

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As per data released by the Reserve Bank of India (RBI) on the country's balance of payments during the second quarter (July-September) of 2022-23, the current account balance of $36.4 billion is double the $18.2 billion (2.2 percent of GDP) posted in April-June period of the first quarter and nearly four times of what it was in the second quarter of FY22.
The previous record for the highest CAD was $31.77 billion, posted in the third quarter of 2012-13. For 2021-22 as a whole, the CAD was $38.77 billion.
"Underlying the current account deficit in Q2:2022-23 was the widening of the merchandise trade deficit to $83.5 billion from $63.0 billion in Q1:2022-23 and an increase in net outgo under investment income," the RBI said.
It also said services exports reported a growth of 30.2 percent on a year-on-year basis on the back of rising exports of software, business and travel services. Net services receipts increased both sequentially and on a year-on-year basis.
There was a depletion of foreign exchange reserves (on a BoP basis) to the tune of $30.4 billion in the second quarter of 2022-23 as against an accretion of $31.2 billion in the second quarter of 2021-22. In the first half of 2022-23, there was a depletion of $25.8 billion to the foreign exchange reserves (on a BoP basis), the RBI said.
The private transfer receipts, mainly representing remittances by Indians employed overseas, amounted to $27.4 billion, an increase of 29.7 percent from their level a year ago. In the financial account, net foreign direct investment decreased to $6.4 billion from $8.7 billion a year ago.
The net foreign portfolio investment recorded inflows of $6.5 billion, up from $3.9 billion during the second quarter of 2021-22. The net external commercial borrowings to India recorded an outflow of $0.4 billion in the second quarter of 2022-23 as against an inflow of $ 4.3 billion a year ago.
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