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Current Account Deficit narrows to 1.7% in Q1

By PTI
01 September, 2014

India’s Current Account Deficit narrowed sharply to 1.7 per cent of GDP in the April-June quarter of this fiscal mainly on account of reduction in trade deficit, and a steep decline in gold imports.

“The lower CAD was primarily on account of a contraction in the trade deficit contributed by both a rise in exports and a decline in imports,” RBI said in a statement.

CAD narrowed sharply to USD 7.8 billion (1.7 per cent of GDP) in the first quarter of the 2014-15 fiscal, from USD 21.8 billion (4.8 per cent of GDP) in the year-ago period.

However, it was higher than USD 1.2 billion (0.2 per cent of GDP) in the fourth (January-March) quarter of the previous fiscal, 2013-14.

Decline in imports was primarily led by a steep 57.2 per cent fall in gold imports, which amounted to USD 7 billion – significantly lower than USD 16.5 billion in the April-June quarter of 2013-14, RBI said.

Trade deficit contracted by about 31.4 per cent to USD 34.6 billion in Q1 2014-15, from USD 50.5 billion in Q1, 2013-14.

Exports increased by 10.6 per cent in the first quarter of 2014-15 to USD 81.7 billion. Imports moderated by 6.5 per cent to USD 116.4 billion.

The CAD, which is the difference between the inflow and outflow of foreign currency, had touched a record high of USD 87.8 billion (4.8 per cent) in 2012-13 fiscal mainly on account of steep increase in gold imports.

It had narrowed to USD 32.4 billion (1.7 per cent) for the entire 2013-14 fiscal after government imposed import restrictions on the precious metal.


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Current Account Deficit narrows to 1.7% in Q1

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