India's current account deficit narrows to $1.4 billion in December quarter as net services receipts rise

Mumbai: India's current account deficit narrowed sharply to $1.4 billion or 0.2 percent of GDP in the December quarter, the Reserve Bank of India (RBI) said on Thursday.The deficit was at 2.7 percent of the Gross Domestic Product (GDP) in the year-ago period and 0.9 percent in the preceding quarter.The sharp contraction was primarily due to a lower trade deficit at $34.6 billion, and a rise in net services receipts, the central bank said.[caption id="attachment_4292949" align="alignleft" width="380"]

Representational image. News 18.[/caption]“The contraction in the current account deficit or CAD (in 2019 Q4) was primarily on account of a lower trade deficit at $34.6 billion and a rise in net services receipts at $21.9 billion,” the RBI said in a statement.India’s monthly trade deficit, however, widened to $15.17 billion in January compared with $14.73 billion a year earlier, and sharply higher versus the deficit of $11.25 billion in December, trade ministry data last month showed.Data last month showed annual economic growth slowed to a more-than-six-year low of 4.7 percent in the December quarter.The CAD is a critical indicator of macroeconomic health and represents the gap between the overall foreign exchange expended and received in the economy.The data also comes on a day when the rupee depreciated to a 17-month low of 74.24 against the US dollar.For the first nine months of the fiscal year, the CAD has narrowed to 1 percent of the GDP.