India’s current account deficit (CAD) widened to $9.7 billion, or 1.1% of GDP, in the April-June quarter of fiscal 2024, compared to $8.9 billion, or 1% of GDP, during the same period last year, according to data released by the Reserve Bank of India (RBI) on Monday. The widening of the CAD was primarily driven by a higher merchandise trade deficit, which stood at $65.1 billion, up from $56.7 billion in the corresponding quarter a year ago.
This marks a shift from the previous quarter, where India reported a revised current account surplus of $4.6 billion, or 0.5% of GDP. The rise in the deficit for the April-June quarter aligns with expectations, as import growth increased amid rising demand.
Services exports and remittances, however, offered some respite. Net services receipts rose to $39.7 billion, up from $35.1 billion a year ago, driven by strong growth across key sectors like computer services, business services, and travel. Additionally, private transfer receipts, predominantly remittances from Indians working overseas, increased to $29.5 billion from $27.1 billion.
Economists remain optimistic about India’s overall external balance. On the broader balance of payments front, India recorded a surplus of $5.2 billion for the first quarter, though this was significantly lower than the $24.4 billion surplus recorded in the same period last year.
