© Reuters. FILE PHOTO: A general view of Mumbai’s central financial district, India, November 22, 2017. REUTERS/Danish Siddiqui/File Photo
By Swati Bhat
Exciting News from Mumbai! India’s current account deficit narrowed more than expected in the July-September quarter, and the central bank reported this on Tuesday. This impressive improvement was largely due to a lower merchandise trade deficit and the growth of services exports.
The current account deficit stood at $8.3 billion, or 1% of GDP, in the second quarter of fiscal 2023/24 compared with $9.2 billion or 1.1% of GDP in the previous quarter.
Last year, the CAD had been at $30.9 billion or 3.8% in the same quarter. This significant reduction surpassed the median forecast in a Reuters poll of 18 economists, who predicted a deficit of $9 billion.
“Following the expansion in the merchandise trade deficit in October 2023, we expect the CAD for the ongoing quarter to widen appreciably, to around $18-20 billion,” predicted Aditi Nayar, Chief Economist, Head – Research at rating agency ICRA.
On the bright side, merchandise trade deficit narrowed to $61 billion in the quarter, from $78.3 billion in the year-ago quarter. Also, services exports grew by 4.2% on a year-on-year basis, contributing to the positive economic report.
According to the central bank, private transfer receipts, which are mainly remittances by Indians employed overseas, rose 2.6% to $28.1 billion on year. Additionally, the country’s balance of payments recorded a small surplus of $2.5 billion in the September quarter, compared with a deficit $30.4 billion a year ago.
