India's current account deficit (CAD) narrowed to 1.2% of the GDP, or $10.5 billion, in the third quarter of this financial year from $11.4 billion in the previous three months and $16.8 billion a year ago, according to RBI data released on Tuesday (March 26).
Foreign direct investment (FDI) recorded a net inflow of $4.2 billion, more than double the $2 billion in Q3 of 2022-23. Foreign portfolio investment recorded a net inflow of $12 billion in the quarter, higher than $4.6 billion a year ago.
However, net FDI inflow, at $8.5 billion during April-December 2023, was lower than $21.6 billion during April-December 2022, RBI said.
The merchandise trade deficit at $71.6 billion, was marginally higher than $71.3 billion during the third quarter of 2022-23.
Services exports grew by 5.2% in the third quarter on a year-on-year basis on the back of rising exports of software, business and travel services. Net services receipts increased both sequentially and year-on-year, which helped cushion the CAD.
External commercial borrowings (EBCs) recorded a net outflow of $2.6 billion in October-December against $2.5 billion a year ago. Non-resident deposits recorded a higher net inflow of $3.9 billion versus $2.6 billion a year ago.
The accretion of foreign exchange reserves (on a BoP basis) was at $6 billion in October-December (the third quarter of the current financial year that ends on March 31) compared to an accretion of $11.1 billion a year ago.
