Current account deficit surges 72 % to $15.8 b in July-Sept
The Hindu
India's current account deficit, representing net flow of income out of the country barring capital movements, surged 72 per cent to $15.8 billion in the July-September quarter over the same period last year.
The increase in current account deficit (CAD) during the period under review is due to higher imports.
This is largely on account of economic recovery and larger payments overseas for certain services, according to the data on Balance of Payments (BoP) released by the Reserve Bank of India (RBI). In the corresponding period last year, current account deficit stood at $9.2 billion.
The current account deficit, which includes deficit in external trade of goods, services, besides net investment income, stood at 2.9 per cent of gross domestic product (GDP) last fiscal, and experts believe that it will increase a bit to 3 per cent of GDP this fiscal. However, if this trend continues, current account deficit may turn out to be much higher than 3 per cent.
The net outflow of money on current account was, however, more than offset by inflow on capital account, despite moderation in foreign direct investment (FDI). Higher capital inflows were due to higher investment in capital markets by foreign funds, external commercial borrowings by India Inc and external assistance, the data showed.
During the July-September quarter, foreign institutional investors (FIIs) put in $18.8 billion, while it was only $7 billion in the same period last fiscal. However, foreign direct investment fell to $2.5 billion during the period under reference from $7.5 billion in the year-ago period.
As external commercial borrowings among other overseas debts rose, India's external debt rose by 12.8 per cent to $295.8 billion in the first half of 2010-11.
With the country receiving more capital inflows than its deficit on current account, there was net accretion of $3.3 billion to foreign exchange reserves.
Current account deficit climbed because imports rose to $177.5 billion from $138.4 billion a year-ago, as economy was on the uptick, reverting to high 8.9 per cent growth in the second quarter of this fiscal. Though exports also rose to $110.5 billion from $82.6 billion, the much higher imports led to trade deficit widening to $66.9 billion from $55.9 billion. The country also received less inflow of money in services and investment income on net basis at $39.1 billion against $42.5 billion in July-September 2009.
This is attributed to higher payments for travel, business and financial services abroad.
India's current account deficit, representing net flow of income out of the country barring capital movements, surged 72 per cent to $15.8 billion in the July-September quarter over the same period last year.
The increase in current account deficit (CAD) during the period under review is due to higher imports.
This is largely on account of economic recovery and larger payments overseas for certain services, according to the data on Balance of Payments (BoP) released by the Reserve Bank of India (RBI). In the corresponding period last year, current account deficit stood at $9.2 billion.
The current account deficit, which includes deficit in external trade of goods, services, besides net investment income, stood at 2.9 per cent of gross domestic product (GDP) last fiscal, and experts believe that it will increase a bit to 3 per cent of GDP this fiscal. However, if this trend continues, current account deficit may turn out to be much higher than 3 per cent.
The net outflow of money on current account was, however, more than offset by inflow on capital account, despite moderation in foreign direct investment (FDI). Higher capital inflows were due to higher investment in capital markets by foreign funds, external commercial borrowings by India Inc and external assistance, the data showed.
During the July-September quarter, foreign institutional investors (FIIs) put in $18.8 billion, while it was only $7 billion in the same period last fiscal. However, foreign direct investment fell to $2.5 billion during the period under reference from $7.5 billion in the year-ago period.
As external commercial borrowings among other overseas debts rose, India's external debt rose by 12.8 per cent to $295.8 billion in the first half of 2010-11.
With the country receiving more capital inflows than its deficit on current account, there was net accretion of $3.3 billion to foreign exchange reserves.
Current account deficit climbed because imports rose to $177.5 billion from $138.4 billion a year-ago, as economy was on the uptick, reverting to high 8.9 per cent growth in the second quarter of this fiscal. Though exports also rose to $110.5 billion from $82.6 billion, the much higher imports led to trade deficit widening to $66.9 billion from $55.9 billion. The country also received less inflow of money in services and investment income on net basis at $39.1 billion against $42.5 billion in July-September 2009.
This is attributed to higher payments for travel, business and financial services abroad.
Source: http://www.thehindu.com/business/Economy/article1021266.ece?homepage=true; accessed 1 Jan. 2011
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