Current Account Deficit (CAD) in Q1 surges to $21.8 billion
As per the Reserve Bank of India (RBI), India’s Current Account Deficit (CAD) for the first quarter ended June 2013 has widened to 4.9% of Gross Domestic Product (GDP) compared to 4% in the same period of the previous financial year owing to a rise in imports and some decline in merchandise exports.
If we subtract the increase in gold imports of $7.3 billion in the first quarter of 2013-14 over the corresponding quarter of the preceding year the CAD works out to $14.5 billion, which means 3.2% of GDP.
The merchandise exports decreased by 1.5% to $73.9 billion in the first quarter of 2013-14 compared with a decline of 4.8% at $75 billion in the year-ago period.
On the other hand, merchandise imports increased by 4.7% at $124.4 billion as against a decline of 3.9% at $118.9 billion, primarily owing to a sharp rise in gold imports in the first two months of the quarter.
Despite a net outflow in portfolio investment, led by Foreign Institutional Investor (FII) debt outflows, net inflows under capital and financial account (excluding changes in foreign exchange reserves) rose by 25.2% to $20.5 billion in the first quarter of 2013-14 from $16.4 billion in first quarter of 2012-13.
While net foreign direct investment surged to $6.5 billion in the Q1 of the current fiscal from $3.8 billion in the Q1 of 2012-13, net portfolio investment recorded a marginal outflow of $0.2 billion compared with an outflow of $2 billion, primarily led by the debt component of FII investment.
However, net overseas borrowing by banks rose by 57.5% to $4.7 billion in the first quarter of 2013-14 from $3 billion in first quarter of 2012-13. Net External Commercial Borrowings (ECBs) at $0.4 billion remained same.
Categories: India Current Affairs 2017