India's current account deficit $8.3 bn in Q2 FY24, 1% of GDP

Underlying the lower current account deficit on a year-on-year (YoY) basis in Q2 FY24 was the narrowing of merchandise trade deficit to $61 billion from $78.3 billion in Q2 FY23, a release from the Reserve Bank of India (RBI) said.

Net outgo on the primary income account, primarily reflecting payments of investment income, increased to $12.2 billion during the quarter from $ 11.8 billion a year ago.

Private transfer receipts, mainly representing remittances by Indians employed overseas, amounted to $28.1 billion, an increase of 2.6 per cent YoY.

In the financial account, net foreign direct investment witnessed an outflow of $0.3 billion during the quarter compared to an inflow of $6.2 billion in Q2 FY23.

Foreign portfolio investment recorded net inflow of $4.9 billion, lower than $6.5 billion during Q2 FY23.

External commercial borrowings to India recorded net outflow of $1.8 billion in Q2 FY24 compared with $0.5 billion in Q2 FY23.

The country’s current account deficit moderated to 1 per cent of the GDP in the first half (H1) of this fiscal from 2.9 per cent of the GDP in H1 FY23 on the back of a lower merchandise trade deficit. Net invisibles receipts were higher in H1 FY24 on a YoY basis.

Net FDI inflow at $4.8 billion in H1 FY24 was lower than $19.6 billion in H1 FY23.

ALCHEMPro News Desk (DS)