India’s current account deficit narrowed to $1.3 billion, or 0.2 per cent of GDP, in the January-March quarter of FY23, mainly due to moderation in trade deficit and a robust increase in services exports, RBI data showed on Tuesday.

However, for the 2022-23 fiscal, the current account balance recorded a deficit of 2 per cent of GDP compared with 1.2 per cent in 2021-22.

“India’s current account deficit (CAD) decreased to $1.3 billion (0.2 per cent of GDP) in Q4:2022-23 from $16.8 billion (2.0 per cent of GDP) in Q3:2022-23, and $13.4 billion (1.6 per cent of GDP) a year ago,” according to the RBI’s ‘Developments in India’s Balance of Payments during the Fourth Quarter (January-March) of 2022-23’.

The sequential decline in CAD in the fourth quarter of 2022-23 was mainly on account of a moderation in the trade deficit to $52.6 billion from $71.3 billion in the preceding quarter, coupled with robust services exports, it said.

Net services receipts increased, on a sequentially and year-on-year (y-o-y) basis, on the back of a rise in net earnings from computer services.

The central bank had been maintaining that the CAD, a key indicator of the country’s balance of payments, would remain manageable.

Private transfer receipts in the January-March period, mainly representing remittances by Indians employed overseas, increased to $28.6 billion, up by 20.8 per cent year-on-year.

In the financial account, the RBI said net foreign direct investment (FDI) at $6.4 billion was higher than $2 billion in Q3 2022-23, although lower than a year ago ($13.8 billion).

Net foreign portfolio investment (FPI) recorded an outflow of $1.7 billion — driven by the equity segment compared with an outflow of $15.2 billion during the corresponding period a year ago.

PTI