Falling net FDI levels, it says, were driven by rising repatriation due to foreign investors realising higher returns on investments due to surging stock market.
Overdrafts allow current account holders to withdraw more money than their account balance up to a predetermined limit, essentially borrowing from the bank.
India’s merchandise trade deficit dipped to 12-month low of $17.7 bn in Jan, while services trade surplus rose to record $16.5 bn. Services exports jumped by more than $4 bn in December.
Strong domestic demand amidst high commodity prices will raise total import bill and contribute to unfavourable developments in the current account balance, warns report.
Majority of the country's deficit is due to negative balance in merchandise account. India usually runs a surplus in services & remittances, but incurs deficit in trade of merchandise.
RBI data shows that India's CAD was around $23.90 billion in the first quarter of FY-22/23. Following the rising prices of commodities globally, the trade deficit also has been affected.
Commerce Secretary B.V.R. Subrahmanyam says country's trade deficit surged in July as elevated commodity prices and depreciating rupee inflated its import bill.
The RBI said the current account balance swung into surplus territory on the back of a sharp contraction in the trade deficit to $102.2 billion from $157.5 billion in 2019-20.
In the current fiscal, as Covid impacted trade, current account had been in surplus in the previous two quarters, according to balance of payments data released by RBI Wednesday.
India’s policymakers need to ensure that labourers, and milk and newspaper delivery workers, do not have to sacrifice food just to keep a roof over their heads.
In the latest budget, the FDI limit was increased to 100 percent, but most foreign companies are not buying such large stakes in the Indian insurance sector.
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