India Current Account Gap Widens More Than Estimated on Trade

A gantry cranes loads a shipping container onto a truck from a ship docked at the Jawaharlal Nehru Port in Navi Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

India Current Account Gap Widens More Than Estimated on Trade


India’s current-account deficit widened more than expected as the trade gap expanded and the country saw lower private transfers from abroad.

The shortfall in the current account, the broadest measure of overseas trade, was $8.1 billion, or 1% of gross domestic product, in January-March, the Reserve Bank of India said in a statement Wednesday. That compares with a median estimate of $7.5 billion in a Bloomberg survey of 15 analysts.

Key Insights

  • India’s balance of payments surplus last year hit a record, according to data going back almost a decade, as the Covid-19 pandemic decimated trade
  • Wednesday’s data, which covers a period before India’s second wave of cases, saw net services income rise on the back of higher earnings from computer, transport and business services, the RBI said
  • The underlying reason for the deficit was “primarily on account of a higher trade deficit and lower net invisible receipts than in the corresponding period of the previous year,” the RBI said

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  • Imports were higher during the quarter from a year ago while exports lagged
  • Net foreign portfolio investment was $7.3 billion, compared with a decline of $13.7 billion a year ago, mostly reflecting purchases of Indian stocks
  • To read the full RBI statement, click here

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