On March 12, 2020, According to the report “Developments in India’s Balance of Payments during the third quarter (October-December) of 2019-20”,released by Reserve Bank of India (RBI), India’s current account deficit (CAD) fell sharply to $ 1.4 billion, or 0.2 % of GDP (gross domestic product), for the October-December 2019 quarter of the current financial year (FY 2019-20) due to the lower trade deficit,which coming down to $ 34.6 billion and an increase in net services revenue at $ 21.9 billion.
Key Points:
i.Comparison: This figure was 2.7 % of GDP (or $ 17.7 billion) in the same period of last fiscal and 0.9 % of GDP (or $ 6.5 billion) in the previous quarter of the current financial year.
ii.FDI: The Net Foreign direct investment (FDI) stood at $ 10.0 billion.It is higher level than in the same period of 2018-19, which registered $ 7.3 billion.
iii.Foreign portfolio investments: It posted a net inflow of $ 7.8 billion compared to an outflow of $ 2.1 billion in 2018-19 due to net purchases in both the debt and equity markets.
iv.ECB: The net inflow of external commercial borrowings (ECB) by Indian companies uplifted to $ 3.2 billion for the 3rd quarter of FY-20,an up from the $ 2 billion in the year-ago period.
v.Foreign exchange reserves: The foreign exchange reserves in India accumulated $ 21.6 billion on a balance of payments basis in December 2019 quarter , compared with a depletion of $ 4.3 billion in 2018 quarter.
vi.CAD figures came on the day the rupee closed at 74.24 against the dollar. This is the lowest level of the rupee in the last 17 months.
First 9 month (April-December 2019-20) data:
i.CAD: Talking about the first 9 months of the current financial year- FY 20 (April-December of 2019-20),the CAD was limited to 1% of GDP (or $ 118.9 billion), compared to 2.6% or $ 145.1 billion in the 3rd quarter of last fiscal year 2018-19.
ii.Net FDI inflows increased at $ 32.1 billion for December 2019 , as against $ 24.3 billion in the same period of 2018 quarter.
iii.The Foreign portfolio investments witnessed a net inflow of $ 15.1 billion in 3rd quarter of FY -20 as against an outflow of $ 11.9 billion a year ago. For the first 9 months of FY-20 foreign exchange reserves accumulated at US$ 40.7 billion.
About CAD: It is the difference between foreign exchange inflows and outflows.
About Reserve Bank of India (RBI):
Headquarters– Mumbai,Maharashtra
Established– 1 April 1935
Governor– Shaktikanta Das
Deputy Governors– 4 (BP Kanungo, Mahesh Kumar Jain, Michael Debabrata Patra) & N S Vishwanathan ,who is due to retire on July 3,2020, had resigned on March 5,2020.
