India’s Current Account Deficit Widens Marginally To 1.1% Of GDP In Q1FY25

India’s current account deficit widened marginally in the April–June 2024 quarter, led by a rise in the merchandise trade deficit.

It widened marginally to $9.7 billion (1.1% of GDP) in the first quarter of the financial year 2024–25 from $8.9 billion (1% of GDP) in Q1 FY24 and against a surplus of $4.6 billion (0.5% of GDP) in Q4 FY24.

The widening of CAD on a year-on-year basis was primarily due to a rise in merchandise trade deficit to $65.1 billion in Q1 FY25 from $56.7 billion in Q1 FY24.

• Net services receipts increased on a YoY basis to $39.7 billion in Q1 FY25 from $35.1 billion a year ago. Services exports have risen on a YoY basis across major categories such as computer services, business services, travel services, and transportation services.

• Private transfer receipts, mainly representing remittances by Indians employed overseas, increased to $29.5 billion in Q1 FY25 from $27.1 billion in Q1 FY24.

• Net outgo on the primary income account—primarily reflecting payments of investment income—increased to $10.7 billion in Q1 FY25 from $10.2 billion in Q1 FY24.

• In the financial account, net foreign direct investment inflows rose to $6.3 billion in Q1 FY25 from $4.7 billion in the corresponding period of 2023–24.

• Net inflows under foreign portfolio investment moderated to $0.9 billion from $15.7 billion in Q1 FY24.

• Net inflows under external commercial borrowings to India amounted to $1.8 billion in Q1 FY25, lower than $5.6 billion in the corresponding period a year ago.

• Non-resident deposits recorded net inflows of $4.0 billion, higher than $2.2 billion a year ago.

• There was an accretion of $5.2 billion to the foreign exchange reserves (on a balance of payments basis) in Q1 FY25 as compared with $24.4 billion in Q1 FY24.