India's Current Account Deficit (CAD)
India's current account deficit widened to $11.5 billion, or 1.1% of the GDP, during the October-December 2024 quarter. This increase was primarily due to a rise in the merchandise trade deficit, according to data from the Reserve Bank of India (RBI).
Comparison with Previous Periods
- In the October-December 2023 quarter, the CAD was $10.4 billion, maintaining a rate of 1.1% of GDP.
- For the April-December 2024 period, the CAD increased to $37 billion or 1.3% of GDP, up from $30.6 billion or 1.1% of GDP in the same period of 2023.
Merchandise Trade and Services
- The merchandise trade deficit grew to $79.2 billion from $71.6 billion year-over-year in Q3 FY2025.
- Net services receipts rose to $51.2 billion, compared to $45 billion a year ago.
- Key growth in services exports was observed in business, computer, transportation, and travel services.
- Personal transfer receipts, primarily remittances by Indians abroad, rose to $35.1 billion from $30.6 billion in Q3 FY2024.
Financial Account Movements
- Foreign direct investment saw a net outflow of $2.8 billion compared to an inflow of $4 billion in the corresponding period of 2023-24.
- Foreign portfolio investment recorded a net outflow of $11.4 billion, contrasting with an inflow of $12 billion in Q3 FY2024.
- Net inflows under external commercial borrowings (ECBs) amounted to $4.3 billion, compared to an outflow of $2.7 billion a year ago.
- Non-resident deposits (NRI deposits) showed a net inflow of $3.1 billion, slightly lower than $3.9 billion a year earlier.
Balance of Payments (BoP)
- On a BoP basis, there was a depletion of $37.7 billion from the foreign exchange reserves in Q3 FY 2024-25, compared to an accretion of $6 billion in Q3 2023-24.
