According to data released Wednesday by the Reserve Bank of India, the current account deficit (CAD), in India fell to $13.4 billion from $22.2 billion during the previous quarter.
From 2.6 percent in the preceding quarter, the current account deficit for the fourth quarter ended March 2022 was 1.5%.
The decline in CAD over the quarter of Q4:2021-22 is mainly due to a moderated trade deficit and lower net income. The RBI stated that net services receipts rose sequentially and year-on-year (yo-y) due to an increase in net earnings from business and computer services.
Private transfer receipts, mostly representing overseas remittances of Indians, increased by 13.4% to $ 23.7Billion in the March 2022 quarter, up from their level last year.
The net outgo from the primary income account, which mainly reflects net income payments on foreign investments, declined sequentially and on a y/o-y basis.
The financial account shows that net foreign direct investment (FDI), at $13.8billion, was more than $2.7billion in the fourth quarter 2020-21.
Net foreign portfolio investments (FPI) saw an outflow in excess of $15.2 billion, mainly from equity markets.
In Q4:2021-22, India’s net external commercial borrowings (ECBs), were $3.3 billion, compared to $6.1 billion a Year ago.
The foreign exchange reserves were down $16.0 billion (on a BoP basis), compared to an accretion $3.4 billion in Q4 2020-21.
The current account balance showed a deficit of 1.2% of GDP for the entire year 2021-22. This was compared to a surplus in 2020-21. The trade deficit increased to $189.5 Billion from $102.2 Billion a year earlier, according the RBI.
Net invisible receipts rose in 2021-22 because of an increase in net services exports and net private transfers receipts. Even though net income outgo was higher, they were still higher than last year.
Inflows of net FDI to the United States were $38.6 Billion in 2021-22, compared to $44.0 Billion in 2020-21.
Net FPI saw an outflow in 2021-22 of $16.8billion, compared to an inflow in 2019-20 of $36.1billion.
The RBI data revealed that foreign exchange reserves increased by $47.5 billion in 2021-22 (on a BoP)