India’s Current Account Deficit Widens
India’s current account deficit (CAD), or the difference in the value of goods and services exported and imported, widened from $6.2 billion in the first quarter (April-June) to $8.2 billion in the second quarter (July-September). However, on a year-on-year basis, the July-September CAD was lower than $10.9 billion, or 2.2 per cent of GDP. The contraction in CAD was primarily on account of lower trade deficit in second quarter compared with the same time last year,” RBI said in the second quarterly balance of payments data release. Referring to trade in services in the second quarter of FY16, RBI said net services receipts moderated marginally on a year-on-year basis, largely due to a fall in export receipts in transport, insurance and pension services. However, there has been some improvement over the preceding quarter. The private transfer receipts, mainly representing remittances by Indians employed overseas, amounted to $16.5 billion, a marginal decline from their level in the preceding as well as the corresponding quarter.
The widening deficit is something you’re going to have to live with for the next two quarters,” said Madan Sabnavis, chief economist at Credit Analysis & Research Ltd in Mumbai. However it’s narrowed from the previous year, indicating “there isn’t a real big problem here,” he said.