The Reserve Bank of India (RBI) reports a reduction in India's current account deficit to 1% of the Gross Domestic Product (GDP) for the period of July to September.

-

The Reserve Bank of India (RBI) reports a reduction in India's current account deficit to 1% of the Gross Domestic Product (GDP) for the period of July to September

In the second quarter of the fiscal year 2023-24, India's current account deficit (CAD) contracted to 1% of the gross domestic product (GDP), a decline from 1.1% in the preceding quarter and a significant reduction from the 3.8% recorded a year ago. The Reserve Bank of India (RBI) released data on Tuesday indicating a decrease in the CAD to $8.3 billion during the September quarter, compared to a deficit of $9.2 billion in the preceding three months. In the corresponding period of the previous fiscal year (2022-23), the CAD had stood at $30.9 billion.

This decline is primarily attributed to the narrowing of the merchandise trade deficit, which decreased from $78.3 billion in Q2FY23 to $61 billion in Q2FY24.

A statement from the central bank highlighted that services exports, driven by software, business, and travel services, grew by 4.2% on a year-on-year basis. Net services receipts witnessed sequential and year-on-year increases.

Aditi Nayar, Chief Economist and Head of Research and Outreach at Icra Ltd, noted that the Q2FY24 deficit surpassed expectations, coming in well below an estimated $13 billion. This was attributed to a smaller-than-anticipated merchandise trade deficit. However, Nayar anticipates a widening of the deficit in the December quarter, projecting it to be around $18-20 billion. Nonetheless, the expectation for the FY24 CAD is now in the range of 1.5-1.6% of GDP, unless there is a significant rebound in commodity prices.

During the September quarter, private transfer receipts, mainly representing remittances from Indians employed overseas, totaled $28.1 billion, marking a 2.6% increase from the corresponding period last year.




In the financial account, net foreign direct investment (FDI) in Q2FY24 recorded an outflow of $0.3 billion, in contrast to an inflow of $6.2 billion a year ago. Foreign portfolio investments (FPI) showed net inflows of $4.9 billion, a decrease from the $6.5 billion recorded in Q2FY23.

RBI data indicated that external commercial borrowings resulted in an outflow of $1.8 billion in Q2FY24, compared to a net outflow of $0.5 billion a year ago. Non-resident deposits exhibited net inflows of $3.2 billion, contrasting with net inflows of $2.5 billion in Q2FY23.

Furthermore, there was an accretion of foreign exchange reserves, on a balance of payments basis, amounting to $2.5 billion in Q2, compared to a depletion of $30.4 billion in the same period a year ago.

Disclaimer: This article is pure understanding of Gyaanleikh team and we don't allow you to rely on the same.

India current account deficit Q2 2023-24
RBI data on CAD in September quarter
Merchandise trade deficit reduction
Services exports growth year-on-year
Aditi Nayar's economic outlook
Private transfer receipts and remittances
Financial account trends Q2FY24
Net FDI and FPI in Q2FY24
External commercial borrowings in Q2
Non-resident deposits and net inflows





Comments

Post a Comment

Best Blogs

IB Interview Questions: M&A : Level 1 M&A Questions

-
Image
1. Why do companies merge? While are many reasons that companies merge the underlying driver of most M&A deals to expedite growth and/or generate cost savings to create value for the owners of the business. When people say that M&A is an ‘art’ and a ‘science’, what does that mean? The science refers to the mechanical valuation methods (Comps, DCF, etc.), but the art is in making a judgment call on valuation based on the outputs of the various valuation methodologies. 2. Who can pay more when buying a company: a Financial buyer or Strategic buyer? Why? Strategic (i.e. corporate) buyers can typically pay more than Financial (i.e. Private Equity) buyers because strategic buyers typically have overlapping operations that can be removed post-merger to generate cost savings (i.e. Synergies). 3. When are sponsors and corporate buyers on equal footing? When a Financial buyer already owns a competing asset, they can generate synergies (which justifies a higher price) and thus are on mor...
Read more

Getting into Investment Banking: A Comprehensive Guide

-
Image
Introduction Breaking into investment banking (IB) is no small feat, whether you're pre-MBA or post-MBA, from a target or non-target school. While high GPAs and test scores are standard, they are often not enough to stand out. Here’s a strategic approach to help you embark on a successful investment banking career. 1. Network Extensively When your application lands at an investment bank, it’s usually reviewed by a small team of bankers responsible for recruiting from specific schools. Given the competitive nature of this field, networking is crucial. Why Networking Matters: Decision-making bankers are more likely to advocate for you if they know you. Especially vital for non-target school students. Engage with alumni and other connections at your target firms. How to Network: Start reaching out to analysts and associates a few months before core recruiting starts. Look for non-target alumni if you're from a non-target school; they often help each other out. Demonstrate Interest...
Read more