MUMBAI: India’s current account deficit (CAD) declined to $13.4 billion in January-March 2022 from $22.2 billion recorded in the previous quarter, according to data released by the Reserve Bank of India (RBI) on Wednesday.
In percentage terms, the current account deficit in the fourth quarter of the year ended March 2022 declined to 1.5 per cent of the country’s gross domestic product (GDP) from 2.6 per cent recorded in the previous quarter.
The sequential decline in CAD in Q4:2021-22 was mainly on account of a moderation in trade deficit and lower net outgo of primary income. Net services receipts increased, both sequentially and on a year-on-year (y-o-y) basis, on the back of a rise in net earnings from computer and business services, the RBI said.
Private transfer receipts, mainly representing remittances by Indians employed overseas, increased to $ 23.7 billion in the quarter ended March 2022, up by 13.4 per cent from their level a year ago.
Net outgo from the primary income account, largely reflecting net income payments on foreign investment, decreased sequentially as well as on a y-o-y basis. In the financial account, net foreign direct investment (FDI) at $13.8 billion was higher than $2.7 billion in the fourth quarter of 2020-21.
Net foreign portfolio investment (FPI) recorded an outflow of $15.2 billion – mainly from the equity market. Net external commercial borrowings (ECBs) to India were lower at $3.3 billion in Q4:2021-22 as compared with $6.1 billion a year ago.
There was a drawdown of $16.0 billion in the foreign exchange reserves (on a BoP basis) as against an accretion of $3.4 billion in Q4:2020-21.
For the whole year 2021-22, the current account balance recorded a deficit of 1.2 per cent of GDP in 2021-22 as against a surplus of 0.9 per cent in 2020-21 as the trade deficit widened to $189.5 billion from $102.2 billion a year ago, the RBI said.
Net invisible receipts were higher in 2021-22 due to an increase in net exports of services and net private transfer receipts, even though net income outgo was higher than a year ago. Net FDI inflows at $38.6 billion in 2021-22 were lower than $44.0 billion in 2020-21. Net FPI recorded an outflow of $16.8 billion in 2021-22 as against an inflow of $36.1 billion a year ago.Net ECBs to India recorded an inflow of $7.4 billion in 2021-22 as compared with $0.2 billion in 2020-21.
In 2021-22, there was an accretion of $47.5 billion to foreign exchange reserves (on a BoP basis), the RBI data showed. (ANI)