The Reserve Bank of India (RBI) states that India’s Current Account Deficit (CAD) reduced to 0.7% of Gross Domestic Product (GDP) (USD 23.2 billion) in the Financial Year 2023-2024(FY 24) from 2% of GDP (USD 67 billion) in FY23.
- India’s current account recorded a surplus of USD 5.7 billion, or 0.6% of the GDP during the January-March 2024 quarter of FY24, driven by a lower merchandise trade deficit.
- In Q3 FY24, the CAD was USD 8.7 billion (1% of GDP).
Note: Current Account Deficit refers to the measurement of a country’s trade where the value of the goods and services it imports is more than the value of the products it exports.
Key Points
i.According to RBI, India’s foreign exchange reserves on a Balance of Payment (BoP) basis increased by USD 30.8 billion in Q4 FY24 as compared with an accretion of USD 5.6 billion in the year-ago period.
- In 2023-24, there was an accretion of USD 63.7 billion to the foreign exchange reserves (on a BoP basis).
ii. Merchandise trade deficit in Q4FY24 stood at USD 50.9 billion, lower than USD 52.6 billion in Q4FY23.
iii. Net services receipts stood at USD 42.7 billion which contributed to the surplus in current account balance in Q4FY24 that stood at USD 39.1 billion in Q4FY23.
- Services exports rose by 4.1% due to an increase in the exports of software, travel and business services.
iv.Net Invisibles saw an increase in FY24 overall due to services and transfers.
- Net Invisibles refers to the balance between the value of exports and imports of invisible goods and services within a country over a specified period also
v. Non-resident deposits increased to USD 5.4 billion in Q4 FY24 higher than USD 3.6 billion in Q4FY23. Remittances by Indians employed overseas, which factors in under private transfer receipts, saw an 11.9% year-on-year (YoY) increase to USD 32 billion.
FPI’s inflow stood at USD 44.1 billion in FY24; FDI inflow recorded at USD9.8 billion
i.Foreign portfolio investment (FPI) recorded a net inflow of USD 44.1 billion in FY24 after an outflow of USD 5.2 billion in FY23. Meanwhile, net Foreign Direct Investment (FDI) inflow reduced to USD 9.8 billion in FY24, down from USD 28 billion in FY23.
ii.FPI’s net inflow was USD 11.4 billion in Q4FY24 while the net FDI inflow stood at USD 2 billion in Q4FY24 respectively.
About the Reserve Bank of India (RBI):
The Reserve Bank of India (RBI) was established on April 1, 1935 in accordance with the provisions of the Reserve Bank of India Act, 1934.
Governor- Shaktikanta Das
Headquarters- Mumbai, Maharashtra
