India’s current account deficit reaches all-time high level, rises to 4.4% of GDP in Q2 from 2.2% in Q1: RBI data

The country's current account deficit (CAD) has surged to an all-time high level in the last quarter as it widened to 4.4 per cent of the GDP in the quarter that ended September, from 2.2 per cent GDP during the April-June period, due to a higher trade gap, as per data released by the Reserve Bank of India (RBI) on Thursday.  

"India's current account balance recorded a deficit of USD 36.4 billion (4.4 per cent of GDP) in Q2:2022-23, up from USD 18.2 billion (2.2 per cent of GDP) in Q1:2022-23 and a deficit of US$ 9.7 billion (1.3 per cent of GDP) a year ago i.e. Q2:2021-22]," the RBI said.

The central bank released India’s balance of payments (BoP) figures for the second quarter (Q2), i.e., July-September 2022-23.

A sharp decline in the CAD was predicted by several experts in this quarter even before as the country continued to struggle with several economic challenges, like global commodity price rise, and rising import costs after the Russia-Ukraine war broke out in February 2022.  

The central bank further stated in its release that the underlying current account deficit in July-September 2022-23 was due to the widening of the merchandise trade deficit to USD 83.5 billion from USD 63 billion in the first quarter of 2022-23 and an increase in net outgo under investment income.

There was a net outgo from the primary income account, mainly reflecting payments of investment income, which increased to USD 12.0 billion from USD 9.8 billion a year ago. 

Meanwhile, private transfer receipts, mainly representing remittances by Indians employed overseas, amounted to USD 27.4 billion, an increase of 29.7 per cent from their level a year ago. 

Services exports reported a growth of 30.2 per cent on a year-on-year (y-o-y) basis on the back of rising exports of software, business and travel services. Net services receipts increased both sequentially and on a yearly basis.

India recorded a current account deficit of 3.3 per cent of GDP in H1 of 2022-23 on the back of a sharp increase in the merchandise trade deficit, as compared with 0.2 per cent in H1 in 2021-22.

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