India’s Current Account Gap Narrows on Higher Services Exports

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India’s current-account deficit shrank last quarter, helped by an increase in invisible receipts, including services exports and remittances.

The shortfall was $14.3 billion in the April-June period, or 2% of gross domestic product, the Reserve Bank of India said in a statement in Mumbai on Monday. That’s lower than the median $16 billion deficit estimated in a Bloomberg survey. The gap in the year-ago period was $15.8 billion, or 2.3%.

Key Insights

• The gap is bigger than the previous quarter’s $4.6 billion, or 0.7% of GDP --- the lowest level in two years
• The deficit narrowed on a year-on-year basis, primarily on account of higher invisible, or services, receipts at $31.9 billion as compared with $29.9 billion a year ago, the RBI said
• Remittances by Indians employed overseas and other private transfers rose 6.2% from a year ago to $19.9 billion, while net services receipts increased 7.3% year-on-year, the RBI said
• Imports were also subdued during the quarter on the back of a broader slump in consumption, which accounts for more than 60% of India’s GDP
• Net foreign portfolio investment flow stood at $4.8 billion in April-June, while FDI inflows during the period jumped to $13.9 billion from $9.6 billion a year ago

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• To read the full RBI statement, click here

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