India’s current account gap narrows to 1.2% of GDP in July-Sept, central bank says

MUMBAI: India’s July-September current account deficit narrowed marginally from a year earlier amid a rise in services exports, the central bank said on Friday.

The current account deficit stood at $11.2 billion, or 1.2% of GDP, in the quarter, compared with a deficit of $11.3 billion or 1.3% of GDP in the same quarter a year ago, the Reserve Bank of India (RBI) said in a statement.

India had logged a current account deficit of a $9.7 billion or 1.1% of GDP in April-June this year.

The median forecast in a Reuters poll of economists was for a deficit of $15.1 billion, or 1.5% of GDP, for July-September.

“A strong service trade surplus continues to be an important counterweight to the wider goods shortfall,” said Radhika Rao, executive director and senior economist at DBS Bank.

India’s net services receipts rose to $44.5 billion in July-September from $39.9 billion a year ago, the RBI said.

India’s forex reserves dip to nearly six-month low

Services exports have risen on a year-on-year basis across major categories such as computer, business, travel and transportation, the RBI said.

India’s merchandise trade deficit widened to $75.3 billion during July-September, from $64.5 billion in the year-ago period.

The country’s monthly merchandise trade deficit widened to a record high of $37.84 billion in November, led by a surge in gold imports, while exports fell due to weaker global demand.

The government is re-examining the surge in gold imports that widened the trade deficit in November and pushed the rupee to an all-time low.

“Looking ahead, the initial estimate of a record-high trade deficit in November could well bloat the current account deficit to 2.5%-2.7% of GDP in the current quarter,” said Aditi Nayar, chief economist at ICRA.

Private transfer receipts, which are mainly remittances by Indians working overseas, rose to $31.9 billion from $28.1 billion a year ago.

India’s balance of payments (BoP) was a surplus of $18.6 billion in July-September, compared with a surplus of $2.5 billion in the year-ago period, the RBI said.

BoP is expected to be “in deep negative” for October-December, led by a widening trade deficit and a slowdown in capital inflows, Gaura Sen Gupta, India economist at IDFC FIRST Bank, said.