By Siddhi Nayak
MUMBAI (Reuters) -India’s current account deficit widened on-year in the April-June quarter, largely due to a higher merchandise trade deficit, the central bank said on Monday.
The current account deficit stood at $9.7 billion, or 1.1% of the GDP, in the fiscal first quarter, compared with a deficit of $8.9 billion or 1% of GDP in the same quarter a year ago, the Reserve Bank of India (RBI) said in a release.
The current account had logged a revised surplus of $4.6 billion or 0.5% of the GDP in the preceding quarter.
“The sequential uptick in CAD was in line with expectations and was led by a pickup in import growth,” said Aditi Gupta, economist at Bank of Baroda.
Import growth is likely to inch up in the coming quarters, supported by higher demand ahead of the festive season and will be partially offset by lower commodity prices, especially oil, she added.
The median forecast in a Reuters poll of economists was for a deficit of $9 billion, or 1% of GDP, for the latest first quarter.
Merchandise trade deficit widened to $65.1 billion in the quarter, from $56.7 billion in the year-ago quarter.
India’s merchandise trade deficit widened more than expected to $29.65 billion in August, as per Reuters calculation based on government data earlier this month. Net services receipts increased to $39.7 billion in the reporting quarter, from US$ 35.1 billion a year ago, the RBI said.
Services exports have risen on a year-on-year basis across major categories such as computer services, business services, travel services and transportation services, the central bank said. Private transfer receipts, which are is mainly remittances by Indians employed overseas, increased to $29.5 billion from $27.1 billion. “Current account deficit is expected to remain below 1% FY25 as well with support from services and remittances. We see an improvement in export growth in FY25 as global growth holds up,” said Swati Arora, economist at HDFC Bank.
Meanwhile, the country’s balance of payments was a surplus of $5.2 billion in the first quarter, compared with a surplus of $24.4 billion in the year-ago period, the RBI said.
(Reporting by Siddhi Nayak; Editing by Nivedita Bhattacharjee)
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