edited by: Mohammad Haris
Last Update: December 29, 2022, 18:31 IST
![Net outflows from the primary income account increased to US$ 12.0 billion from US$ 9.8 billion a year ago. (Photo: Reuters) Net outflows from the primary income account increased to US$ 12.0 billion from US$ 9.8 billion a year ago. (Photo: Reuters)](https://images.news18.com/ibnlive/uploads/2021/07/1627283897_news18_logo-1200x800.jpg?impolicy=website&width=510&height=356)
Net outflows from the primary income account increased to US$ 12.0 billion from US$ 9.8 billion a year ago. (Photo: Reuters)
Net foreign direct investment declined to $6.4 billion from $8.7 billion a year ago
India’s current account deficit (CAD) widened to 4.4 per cent of GDP in the September 2022 quarter, as compared to 2.2 per cent of GDP in the previous quarter, due to higher trade deficit, according to the latest data released by the Reserve Bank of India. India (RBI) on Thursday. It said CAD underlying Q2FY23 widened the goods trade deficit to $83.5 billion from $63 billion in Q1FY23 and increased net outgo under investment income.
“India’s current account deficit to register deficit of US$ 36.4 billion (4.4 per cent of GDP) in Q2 of 2022-23, up from US$ 18.2 billion (2.2 per cent of GDP) in Q1 of 2022-23 is more and there is a deficit of the US dollar. 9.7 billion (1.3 per cent of GDP) a year earlier. [i.e., Q2:2021-22]RBI said.
It said that service exports registered a year-on-year growth of 30.2 per cent on year-on-year basis due to increased exports of software, trade and travel services. Net service receipts grew sequentially and on an annual basis.
“Net expenditure from the primary income account, mainly reflecting the payment of investment income, increased to US$ 12.0 billion from US$ 9.8 billion a year ago. Private transfer receipts, mainly representing remittances by Indians employed abroad, amounted to US$ 27.4 billion, an increase of 29.7 per cent over the year-ago level,” RBI said.
On the financial account, net foreign direct investment declined to $6.4 billion from $8.7 billion a year earlier. Net foreign portfolio investment inflows during Q2 of 2021-22 increased from $3.9 billion to $6.5 billion.
ICRA Chief Economist Aditi Nayar said, “While India’s current account deficit was expected to reach an all-time high in Q2 of FY23, the size of the deficit is higher than our forecast of $31-34.” The negative surprise in the merchandise trade deficit and primary income exceeded the expected services surplus and secondary income inflows.”
He added that with a narrowing of the average trade deficit in October-November 2022 as compared to the previous three months and a stronger services trade balance in October 2022, the size of the CAD could come down to around $25-28 billion in Q3 FY2023. Is. from the all-time highs recorded in the previous quarter, while remaining substantial.
India recorded an outflow of $0.4 billion in net external commercial borrowings in the second quarter of 2022-23, as against $4.3 billion a year ago. Non-resident deposits registered a net inflow of $2.5 billion as against a net outflow of $0.8 billion in Q2: 2021-22.
Balance of Payments during April-September 2022
India recorded a current account deficit of 3.3 per cent of GDP in the first half of 2022-23, led by a sharp increase in the merchandise trade deficit, as against 0.2 per cent in H1:2021-22.
Net invisible receipts were higher in H1:2022-23 on a YoY basis due to higher net receipts of services and personal transfers.
Net FDI inflow of $20.0 billion in H1 of 2022-23 was as against $20.3 billion in H1 of 2021-22. Portfolio investment recorded a net outflow of $8.1 billion in H1:2022-23, as against $4.3 billion a year ago.
In the first half of 2022-23, the forex reserves (on a BoP basis) were drawn down by $25.8 billion.
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