In the third quarter of the fiscal year 2023-24, India’s current account balance showed a deficit of US$ 10.5 billion, equivalent to 1.2 per cent of GDP. This marked a decrease from US$ 11.4 billion (1.3 per cent of GDP) in the previous quarter and US$ 16.8 billion (2.0 per cent of GDP) in the same quarter of the previous fiscal year.
Merchandise Trade Deficit
- The merchandise trade deficit slightly increased to US$ 71.6 billion, compared to US$ 71.3 billion in the corresponding period of the previous fiscal year.
Services Sector Performance
- Services exports experienced a growth of 5.2 per cent year-on-year, primarily driven by rising exports in software, business, and travel services.
- Net services receipts witnessed sequential and year-on-year growth, contributing to mitigating the current account deficit.
Primary Income Account
- Net outgo on the primary income account, primarily reflecting payments of investment income, rose to US$ 13.2 billion from US$ 12.7 billion in the same quarter of the previous fiscal year.
Private Transfers and Financial Account
- Private transfer receipts, mainly comprising remittances by Indians employed overseas, amounted to US$ 31.4 billion, showing a 2.1 per cent increase from the previous year.
- Foreign direct investment recorded a net inflow of US$ 4.2 billion, compared to US$ 2.0 billion in the corresponding quarter of the previous fiscal year.
- Foreign portfolio investment witnessed a significant net inflow of US$ 12.0 billion, higher than US$ 4.6 billion in the same quarter of the previous fiscal year.
- External commercial borrowings to India showed a net outflow of US$ 2.6 billion, slightly higher than the previous year’s outflow of US$ 2.5 billion.
- Non-resident deposits saw a higher net inflow of US$ 3.9 billion compared to US$ 2.6 billion in the same quarter of the previous fiscal year.
Foreign Exchange Reserves
- Foreign exchange reserves witnessed an accretion of US$ 6.0 billion during Q3:2023-24, compared to US$ 11.1 billion in the same quarter of the previous fiscal year, on a balance of payments basis.