The current account in the balance of payments which deflects the country’s exports and imports of goods and services ended in a deficit of $ 18.2 billion or 2.2 per cent of GDP in the quarter ended December 2022 from $ 30.9 billion or 3.7 per cent of GDP in the June 2022 quarter and $ 22.2 billion or 2.7 per cent of GDP in the December quarter of 2021.
“Underlying the lower current account deficit in Q3’2022-23 was a narrowing of merchandise trade deficit to $ 72.7 billion from $ 78.3 billion in Q2′ 2022-23, coupled with robust services and private transfer receipts” The Reserve Bank said in its release of the preliminary balance of payments figures on Friday.
Net outgo from the primary income account, mainly reflecting investment income payments, increased to $ 12.7 billion from US$ 11.5 billion a year ago.
Services exports grew 24.5 per cent on a year-on-year (y-o-y) basis on the back of rising exports of software, business and travel services. Private transfer receipts, mainly representing remittances by Indians employed overseas, amounted to US$ 30.8 billion, an increase of 31.7 per cent from their level a year ago.
” With the sharp deceleration in commodity prices due to global slowdown and resilient remittances & services surplus, the current account is expected to record a marginal surplus in 4QFY23″ said Sunil Sinha, principal economist at India Ratings. “Overall, Ind-Ra expects the current account deficit to come in under 3% of GDP in FY’23”.
The flows under the capital account showed a mixed trend. Net foreign direct investment decreased to $ 2.1 billion from $ 4.6 billion a year ago. Net external commercial borrowings to India recorded an outflow of $ 2.6 billion in the December quarter as compared with an outflow of $ 0.4 billion a year ago.But net foreign portfolio investment recorded inflows of $ 4.6 billion, as once morest an outflow of $ 5.8 billion in Septmber’2021 quarter. Non-resident deposits recorded net inflows of $ 2.6 billion as compared with net inflows of $ 1.3 billion in September 2021 quarter.
Overall the balance of payments ended in a surplus of $11.1 billion during the quarter as compared with $ 0.5 billion in the same period a year ago. This means there was a net gain in forex reserves though in nominal terms, reserves fell due to valuation losses. The valuation loss, reflecting the appreciation of the US dollar once morest major currencies, amounted to $ 29.9 billion during April-December 2022 as compared to a valuation loss of $ 6.9 billion during April-December 2021, RBI said.
