By Swati Bhat
MUMBAI (Reuters) -India’s current account deficit narrowed sharply in the quarter from January to March, mainly on the back of a moderation in the trade gap and an increase in services exports, the Reserve Bank of India said on Wednesday.
The current account deficit stood at $1.3 billion, or 0.2% of GDP, in the fourth quarter of fiscal year 2022/23, compared with a revised deficit of $16.8 billion or 2% of GDP in the preceding October-December quarter.
The deficit had stood at $13.4 billion in the same quarter a year ago, the data showed.
“The sequential decline in CAD in Q4:2022-23 was mainly on account of a moderation in the trade deficit to $52.6 billion in Q4:2022-23 from $71.3 billion in Q3:2022-23, coupled with robust services exports,” the RBI said in a statement.
A Reuters survey of 22 economists showed the current account balance was likely to have recorded a surplus of $3.3 billion, or 0.4% of gross domestic product (GDP) in the March quarter.
Forecasts ranged widely, from a deficit of $5.0 billion to a surplus of $7.8 billion.
“We expect import consolidation to continue, with exports also likely to remain frail, while services surplus would strongly offset the merchandise trade deficit, with net transfers moderating,” said Madhavi Aroro, lead economist at Emkay Global Financial Services.
“For FY24E, we maintain our CAD/GDP at 1.4% ($52 billion), owing to lower prices for oil and other commodities, along with easing domestic and global demand and robust and broadening gains in services exports,” she added.
India’s balance of payments stood at a surplus of $5.6 billion compared to a surplus of $11.1 billion in the preceding quarter and a deficit of $16 billion in the same quarter a year earlier.
Private transfer receipts, mainly representing remittances by Indians employed overseas, increased to $28.6 billion, up 20.8% from a year ago.
For the year, the current account balance recorded a deficit of 2.0% of GDP in FY23 versus a deficit of 1.2% in FY22, as the trade deficit widened to $265.3 billion from $189.5 billion a year ago.