India's current account deficit widens in October-December: RBI

Analysts said the deficit widened because of higher imports, but was still on track to stay relatively muted, at around 1% of GDP for the full year ending March. Image Source: Reuters

India`s current account deficit widened to $7.9 billion, or 1.4 % of gross domestic product, in the October-December quarter from the same period a year earlier, the Reserve Bank of India (RBI) said in a statement on Thursday.

That compared with a deficit of $7.1 billion, or 1.4 % of GDP in the same quarter of 2015, and a deficit of $3.4 billion, or 0.6 % the GDP in the July-September quarter, according to the RBI data.

"The current account deficit for Q3 FY2017 provided a positive surprise, with the size of the deficit appreciably smaller than expected, despite the pressure exerted by higher gold imports and crude oil prices.This is partly on account of a larger services trade surplus than what had been signaled by the monthly data released previously. Moreover, the services trade surplus stood at a 4-quarter high in Q3 FY2017, which is encouraging in light of growing concerns related to global headwinds," Aditi Nayar, Principal Economist, ICRA Ltd said.

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Analysts said the deficit widened because of higher imports, but was still on track to stay relatively muted, at around 1% of GDP for the full year ending March.

Meanwhile, the balance of payments for October-December notched a deficit of $1.2 billion compared with a surplus of $4.1 billion a year ago, the RBI data showed.

"The continued decline in the secondary income balance recorded over the previous four quarters, was arrested in Q3 FY2017, with the net balance remaining at US$ 13.9 billion in line with Q2 FY2017. The sustainability of this trend would take a cue from factors such as crude oil prices, which have weakened in the ongoing month after the spike recorded in the first two months of the quarter," Nayar added.

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