India’s CAD drops to $0.3 bn in Q4

The Dollar Business Bureau

Due to low trade gap, India’s Current Account Deficit declined to $0.3 billion in fourth quarter of FY16 from $7.1 billion registered in third quarter of the same fiscal. CAD is the difference between the outflow and the inflow of foreign exchange.

The GDP for the fourth quarter accounted for 0.1% as against 1.3% recorded in third quarter. For the financial year 2016, CAD shrunk by 1.1% of the GDP.

The Reserve Bank of India, on Friday, stated that the decline to $0.3 billion, with GDP at 0.1%, was marginally lower than $0.7 billion, or 0.1% GDP, recorded in FY15.

The reduction of CAD in Q4 of FY16 was mainly due to low trade defcit, which accounted for $24.8 billion when compared to $31.6 billion recorded in the same quarter in FY15.

On the back of narrowing trade deficit, the CAD for whole of FY16 stood at $22.1 billion, or 1.1% GDP, against $26.9 billion, or 1.8% GDP, registered in FY15.

India’s trade deficit reduced to $130.1 billion in financial year 2015-2016 from $144.9 billion worth trade deficit recorded in FY15.

The total balance of payment during FY16 slipped to $17.9 billion from $61.06 billion in FY15.

In the financial year 2015-2016, the net invisible receipts declined, which reflected moderation in private transfer receipts and net service earnings.

Net FDI inflows in FY16 stood at $36 billion, showing an increase of 15.3% from the FDI inflows registered in FY15.

However, portfolio investments witnessed a total outflow worth $4.5 billion during FY16, as against the net inflow of $40.9 billion registered in FY15.

A drop in foreign exchange reserves, on Balance of Payment basis, was witnessed during the last fiscal year. The foreign exchange reserves, BoP basis, for FY16 stood at $17.9 billion, as against $61.4 billion accumulated in FY15, said RBI.