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The Reserve Bank of India (RBI) has said that India’s current account deficit widened marginally to $9.7 billion or 1.1 per cent of Gross domestic product (GDP) in April-June 2024, as against $8.9 billion or 1 per cent in the year-ago period. The crucial number representing the country’s external sector strength has come on the heels of a surplus of $4.6 billion or 0.5 per cent of GDP recorded in the preceding January-March quarter. 

The RBI attributed the year-on-year widening in current account deficit to a rise in merchandise trade gap which was recorded at $65.1 billion in Q1 FY25 as compared to $56.7 billion in the year-ago period. Net services receipts increased to $39.7 billion during the quarter under review from $35.1 billion a year ago. It added that computer services, business services, travel services and transportation services have seen a rise. However, there was a sharp moderation in the net foreign portfolio investment to $0.9 billion from $15.7 billion in the year ago. Net inflows under external commercial borrowings (ECBs) came down to $1.8 billion during the first quarter, and was lower than $5.6 billion registered in the corresponding period a year ago.

In what can be seen as a jump in remittances by the diaspora, the private transfer receipts increased to $29.5 billion in Q1 FY25, from $27.1 billion witnessed in the same period of last fiscal. Net foreign direct investment inflows increased to $6.3 billion from $4.7 billion on year. Payments of investment income, captured under the net outgo on the primary income account, rose to $10.7 billion from the last year’s $10.2 billion. Non-resident deposits (NRI deposits) recorded net inflows of $4 billion, and was higher than $2.2 billion a year ago. There was an accretion of $5.2 billion to the foreign exchange reserves on a BoP (balance of payments) basis in Q1 FY25 as compared to $24.4 billion in Q1 FY24.