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Informist, Monday, Sept. 30, 2024

NEW DELHI – India's current account deficit widened to $9.74 billion in Apr-Jun, according to data released on Monday by the Reserve Bank of India. The current account was in a surplus of $4.59 billion in Jan-Mar, while it was in deficit of $8.95 billion in the first quarter of 2023-24 (Apr-Mar).

In percentage terms, the current account deficit in Apr-Jun amounted to 1.1% of GDP, slightly higher than 1.0% in Apr-Jun 2023. The widening of the deficit, the RBI said, "was primarily due to a rise in merchandise trade deficit" during the quarter to $65.12 billion from $56.70 billion a year ago.

While the goods trade deficit was higher in Apr-Jun compared to a year ago, so was the services trade surplus, coming in 13% higher at $39.73 billion. The RBI noted that India's services exports had risen across major categories such as computer, business, travel, and transportation services.

Apart from the services trade surplus, a big contributor to foreign inflows was workers' remittances, which were also up 13% on a net basis in Apr-Jun at $16.37 billion. Meanwhile, the net accretion to India's foreign exchange reserves in Apr-Jun was $5.2 billion, down from $24.4 billion in the first quarter of FY24.

According to economists, while the Apr-Jun current account deficit is at comfortable levels, it will likely widen in Jul-Sep because of a surge in gold imports in August. However, according to ICRA Chief Economist Aditi Nayar, the current account deficit may nearly double to 2.0% of GDP in the second quarter, although "gold imports (are) unlikely to sustain this surge in the coming months, (and) we expect the monthly merchandise trade deficit figures to ease".

Data released on Sept. 17 showed India's gold imports in August almost tripled from July to $10.06 billion. This came after the FY25 Union Budget announced a reduction in the basic customs duty on gold to 6% from 15%.  End

US$1 = 83.80 rupees

Reported by Sidharth Upasani

Edited by Saji George Titus

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