India’s current account deficit widened marginally in the July-September quarter but remained well within comfortable limits.
Data released by the Reserve Bank of India on Tuesday showed that the current account deficit for the July-September period stood at $3.4 billion or 0.6 percent of gross domestic product (GDP). The deficit recorded in the second quarter of the current fiscal was wider than the 0.1 percent of GDP reported in the first quarter of the year but much smaller than the previous year. The second quarter current account deficit last fiscal stood at $8.5 billion or 1.7 percent of GDP.
The contraction in the current account deficit on a year-on-year (y-o-y) basis was primarily on account of a lower trade deficit (US$25.6 billion) brought about by a larger decline in merchandise imports relative to exports.Reserve Bank of India Release
On the flip side, there was a fall in net service receipts, remittances and non resident deposits.
Net services receipts moderated, primarily owing to the fall in earnings from software, financial services and charges for intellectual property rights, said the RBI.
Remittances, which have been falling due to the steep decline in oil prices and the resultant pressure on Middle Eastern economies, continued to slide. For the second quarter of the current year, private transfers (which mainly comprise of remittances) stood at $15.2 billion, a drop of 10.7 percent over last year.
Non-resident Indian (NRI) deposits declined to $2.1 billion in the second quarter of 2016-17 from $4.2 billion in the second quarter of 2015-16. These deposits are set to fall further in the third quarter as foreign currency non-resident deposits raised in 2013 come due for redemption.