Current account deficit of India narrows marginally in July-September quarter of FY25

New Delhi: India’s current account deficit (CAD) moderated marginally to $11.2 billion or 1.2 per cent of GDP year-on-year in the July-September quarter of 2024-25. It was at  $11.3 billion or 1.3 per cent of GDP during the second quarter of 2023-24.Data released by the  Reserve Bank data showed this.

Current account deficit occurs when the value of goods and services imported and other payments exceeds the value of export of goods and services and other receipts by a country in a particular period. The CAD is an indicator of the country’s external payment scenario. Trade deficit is the difference between imports and exports of the country.

‘India’s current account deficit (CAD) moderated marginally to $11.2 billion (1.2 per cent of GDP) in Q2 2024-25 from $11.3 billion (1.3 per cent of GDP) in Q2:2023-24,’ the RBI said.

During April-September 2024 (H1 2024-25), the current account deficit was $21.4 billion or 1.2 per cent of GDP compared to $20.2 billion (1.2 per cent of GDP) in the year-ago period. Merchandise trade deficit increased to $75.3 billion in the second quarter of 2024-25 from $64.5 billion in the comparable period of 2023-24.

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Net services receipts increased to $44.5 billion in Q2 2024-25 from $39.9 billion a year ago. Further, private transfer receipts, mainly representing remittances by Indians employed overseas, rose to $31.9 billion in the July-September quarter in 2024-25 from $28.1 billion in the second quarter of 2023-24.

Net foreign direct investment recorded an outflow of $2.2 billion in Q2 2024-25 compared to $0.8 billion outflow in the corresponding period of 2023-24. Net inflows under foreign portfolio investment increased to $19.9 billion in Q2 2024-25 from $4.9 billion a year ago.

During April-September 2024, the net invisibles receipts at $119.0 billion were higher in H1 2024-25 against $101 billion a year ago, primarily on account of higher net services receipts. Also, net FDI inflows at $4.4 billion in H1:2024-25 was higher than $3.9 billion in H1:2023-24.FPI recorded net inflows of $20.8 billion in H1:2024-25 compared to net inflows of $20.7 billion a year ago. In H1 2024-25, there was an accretion of $23.8 billion to the foreign exchange reserves (on a BoP basis).