Current account deficit for Q2 rises to 2.1% of GDP
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India's current account deficit (CAD) rose to $10.1 billion (2.1 per cent of gross domestic product) for second quarter ended September 2014 from $5.2 billion (1.2 per cent of GDP) for July-September 2013. CAD is well within RBI's comfort zone of 2.5 per cent of GDP. The deficit was $7.8 billion (1.7 per cent) in the first quarter ended June 2014.

The increase in CAD was primarily on account of higher trade deficit contributed by both a deceleration in export growth and increase in imports.

The balance of payments was also in positive territory. The accretion was $6.9 billion in reporting quarter against drawdown of $10.4 billion in Q2 of 2013-14.

On BoP basis, merchandise export growth decelerated to 4.9 per cent in Q2 of 2014-15 from 11.9 per cent in Q2 of 2013-14; merchandise imports increased by 8.1 per cent in Q2 of 2014-15 against a decline of 4.8 per cent in Q2 of 2013-14, largely due to a sharp rise in gold imports.

Net services receipts improved by 3.4 per cent in Q2 of 2014-15 on a pick-up telecommunication, computer and information services from their level a year ago.

Net outflow on account of primary income (profit, dividend and interest) amounting to $6.9 billion in Q2 of 2014-15 was higher than the corresponding quarter of 2013-14 ($6.3 billion) as well as the preceding quarter ($6.7 billion).

In Q2 of 2014-15, gross private transfer receipts at $17.4 billion were marginally higher compared with the corresponding quarter of 2013-14.

In the financial account, net flows through foreign direct investment were stable; however, portfolio investment recorded inflows of $9.8 billion against an outflow of $6.6 billion in Q2 of 2013-14.

‘Loans’ (net) availed by deposit taking corporations (commercial banks) witnessed an outflow of $4.6 billion in Q2 of 2014-15 owing to higher repayments of overseas borrowings and a build-up of their overseas foreign currency assets.

Under ‘currency & deposits’, net inflows of NRI deposits at $4.1 billion were lower in Q2 of 2014-15 than $8.2 billion in Q2 of 2013-14.

The amount of loans (net) of other sectors (i.e., external commercial borrowings) at $1.4 billion was a shade higher than $1.3 billion in Q2 of 2013-14.

(Edited by Joby Puthuparampil Johnson)

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