India’s Current Account Slips Into Deficit In Q2: RBI

The current account that records the value of exports and imports of both goods and services along with global transfers of capital was in a surplus mode both in the quarter-ago and year-ago periods

New Delhi: India’s current account slipped into a deficit of $9.6 billion or 1.3 per cent of GDP in the September quarter, according to data released by the Reserve Bank of India (RBI) on Friday.

The current account, which records the value of exports and imports of both goods and services along with international transfers of capital, was in a surplus mode both in the quarter-ago and year-ago periods.

India’s current account surplus had stood at $6.6 billion or 0.9 per cent of GDP in the April-June 2021 quarter, while in the year-ago period (Q2FY22), the surplus had stood at $15.3 billion or 2.4 per cent of the GDP, the data said.

For the reporting quarter, the deficit was mainly due to widening of trade deficit to $44.4 billion from $30.7 billion in the preceding quarter, and an increase in net outgo of investment income, the RBI said.

Net services receipts decreased marginally over the preceding quarter but increased on a year-on-year basis, on the back of robust performance of the exports of computer and business services, it added.

The RBI said, in the financial account, net foreign direct investment (FDI) recorded an inflow of $9.5 billion, lower than $24.4 billion a year ago. Net foreign portfolio investment was $3.9 billion as compared with $7.0 billion in Q2FY20-21.

Net external commercial borrowings to India recorded inflow of $ 4.1 billion in Q2:2021-22 as against an outflow of $3.7 billion a year ago.

Non-resident deposits recorded net outflow of $0.8 billion as against an inflow of $1.9 billion in Q2FY20-21. There was an accretion of $31.2 billion (on a BoP basis) in Q2FY21-22 which also included SDR allocation of $17.86 billion by the International Monetary Fund on August 23, 2021.