India's Current Account Deficit Eases To 1.1% Of GDP In Q3

India's current account deficit eased to 1.1% of the gross domestic product in the quarter ended Dec. 31, 2024, as compared to 1.8% in the July-September period, as per the data released by the Reserve Bank of India on Friday.

The CAD narrowed to $11.5 billion during the third quarter, as against $16.7 billion in the second quarter, the central bank said.

Despite the sequential moderation, the deficit widened as compared to the year-ago period, when it stood at $10.4 billion or 1.1% of the GDP.

For the first nine months of the ongoing fiscal, the CAD came in at $37 billion or 1.3% of GDP, which is wider as compared to $30.6 billion or 1.1% of GDP during April-December period of fiscal 2024.

During the third quarter, the merchandise trade deficit stood at $79.2 billion, 10% higher from $71.6 billion in the corresponding quarter of the previous fiscal.

Net services receipts stood at $51.2 billion in the October-December period, up 13.7% from $45 billion a year ago. "Services exports have risen on a y-o-y basis across major categories such as business services, computer services, transportation services and travel services," the RBI said.

Foreign direct investments, a key metric watched under the balance of payments, witnessed a net outflow of $2.8 billion in the October-December period of the current fiscal, as against an inflow of $4 billion in the year-ago period.

During April-December 2024, the net FDI inflow came in at $1.6 billion, lower as compared to $7.8 billion of inflows in April-December 2023, the RBI data showed.

Foreign portfolio investment remained on similar lines, logging a net outflow of $11.4 billion in the December 2024 quarter, as against an inflow of $12 billion in the year-ago period.

For the nine months ended December, the FPI inflows stood at $9.4 billion, lower than $32.7 billion during the corresponding period a year ago.

Foreign exchange reserves depleted to $37.7 billion in the third quarter, as against an accretion of $6 billion in the year-ago period. 

During April-December 2024, there was a depletion of $13.8 billion to the forex reserves on balance of payments basis, the RBI said.

Net outgo on the primary income account, primarily reflecting payments of investment income, increased to $16.7 billion in the December 2024 quarter from $13.1 billion in the year-ago period.

Similarly, personal transfer receipts, mainly representing remittances by Indians employed overseas, rose to $35.1 billion in the third quarter from $30.6 billion in the corresponding period of the last fiscal.