India's current account deficit (CAD) narrowed marginally to $11.2 billion, or 1.2 percent of GDP, in the July-September quarter of 2024-25, from $11.3 billion, according to data released by the Reserve Bank on December 27. Indicates a slight decrease. billion CAD, or 1.3 percent of GDP, was recorded in the same quarter of 2023-24.
The Reserve Bank highlighted that India's CAD in Q2 2024-25 declined to CAD $11.2 billion (1.2 percent of GDP) as against $11.3 billion (1.3 percent of GDP) in Q2 2023-24.
CAD for the first half of 2024-25 (April-September) was $21.4 billion, or 1.2 percent of GDP, up from $20.2 billion (1.2 percent of GDP) in the corresponding period of the previous year.
According to Reserve Bank balance of payments data, the merchandise trade deficit widened to $75.3 billion in Q2 2024-25 from $64.5 billion in the same quarter of 2023-24.
Net services receipts rose to $44.5 billion in Q2 2024-25 compared to $39.9 billion in the previous year, reflecting growth in services exports across key sectors such as computer services, business services, travel services and transportation services.
Personal transfers, which mainly include remittances from Indians working abroad, increased to $31.9 billion in Q2 2024-25 from $28.1 billion in the same period in 2023-24.
In the fiscal account, the RBI reported a net outflow of foreign direct investment (FDI) of $2.2 billion for Q2 2024-25, compared to a smaller outflow of $0.8 billion in Q2 2023-24. However, net inflows from foreign portfolio investment (FPI) rose significantly to $19.9 billion in Q2 2024-25, up from $4.9 billion a year ago.
Net intangible receipts for the first half of 2024-25 were $119 billion, up from $101 billion in H1 2023-24, driven mostly by higher net service receipts. FDI inflows in H1 2024-25 reached $4.4 billion, higher than $3.9 billion recorded in the same period of the previous year. Foreign portfolio investment showed a net inflow of $20.8 billion in H1 2024-25, up slightly from $20.7 billion in H1 2023-24.
The Reserve Bank also reported an increase of $23.8 billion in India's foreign exchange reserves during H1 2024-25 on a balance of payments basis.