The current account deficit (CAD) nearly doubled to $8.2 billion or 1.6 per cent of the GDP in the October-December period, the Reserve Bank data showed on Tuesday. In the same period a year ago, CAD -- which is the gap between foreign exchange earned and spent -- stood at $4.2 billion or 0.9 per cent of GDP. On sequential basis, however, the CAD narrowed from $10.1 billion or 2 per cent of GDP in the September quarter.
It may be noted that heavy duties on import of gold were in place last fiscal, which are partially withdrawn now. Additionally, the country has also benefited from the lower crude prices. The Reserve Bank of India (RBI) attributed narrowing of CAD on sequential basis to a pick-up in services exports, improvement in net earnings through travel and software services and lower net outflows under primary income profit, dividend and interest.
But the merchandise trade deficit widened to $39.2 billion during the reporting quarter as exports declined 7.3 per cent against a 4.5 per cent dip in imports. The inward remittances stood at $17.5 billion and supported the balance of payments with a 12.6 per cent share in the overall receipts, it said.