India’s current account deficit narrows to 0.2% of GDP in Q4 FY23 on surge in services exports: RBI

India’s current account deficit (CAD) narrowed to US$1.3 billion, or 0.2 percent of GDP, in the January-March quarter of fiscal 2023, mainly due to the moderating trade deficit and a robust rise in services exports, according to RBI -Data on Tuesday showed.

“India’s CAD decreased to US$1.3 billion (0.2 percent of GDP) in the fourth quarter of 2022-23, compared to US$16.8 billion (2.0 percent of GDP) in the third quarter of 2022-231 and $13.4 billion (1.6 percent of GDP) a year ago,” the Reserve Bank said.

The CAD is an important indicator of a country’s balance of payments.

The CAD’s sequential decline in the fourth quarter of the most recent fiscal year was mainly due to a moderation in the trade deficit to $52.6 billion from $71.3 billion in the previous quarter, coupled with resilient services exports.

Services net income increased both sequentially and year-on-year (year-on-year) due to an increase in computing services net income, according to RBI.

Foreign exchange reserves (on a BoP basis) increased by US$5.6 billion while declining by US$16.0 billion in the fourth quarter of 2021/22.

For fiscal year 2022-23, the current account showed a deficit of 2 percent of GDP, compared with a deficit of 1.2 percent in 2021-22 as the trade deficit widened to 265 billion from $189.5 billion a year ago $.3 billion increased.

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