India's CAD sharply narrows to $1.3 bn in Q4 FY23: RBI

There was a robust sequential rise in foreign direct investment (FDI) during the quarter to $6.4 billion, while forex exchange reserves dropped drastically.

While the Q4 FDI figure was higher than $2 billion in Q3, it was lower than $13.8 billion recorded in Q4 in the previous fiscal.

In the previous quarter, the CAD stood at $16.8 billion, 2 per cent of GDP. A year ago, in Q4, the CAD was at $13.4 billion, or 1.6 per cent of GDP.

In its balance of payments notification, RBI said the current account balance registered a deficit of 2 per cent of GDP for FY23 compared to a deficit of 1.2 per cent in FY22, as the trade deficit widened to $265.3 billion from $189.5 billion a year ago.

Net FDI inflows at $28 billion in FY23 were lower than $38.6 billion in FY22. In FY23, $9.1 billion of the foreign exchange reserves were depleted.

Private transfer receipts, mainly representing remittances by Indians employed overseas, increased to $28.6 billion, up by 20.8 per cent from their level a year ago.

In Q4 FY23, there was an accretion to the foreign exchange reserves to $5.6 billion against a depletion of $16 billion in Q4 FY22.

ALCHEMPro News Desk (DS)