Mumbai: A pick up in net exports of services on the back of an improvement in net earnings and steep fall in gold imports helped India’s current account deficit (CAD) narrow to $8.2 billion (1.6 per cent of GDP) in Q3 of 2014-15 from $10.1 billion (2.0 per cent of GDP) in Q2. On a year-on-year (y-o-y) basis, however, the CAD doubled (from $ 4.2 billion or 0.9 per cent of GDP in Q3 of 2013-14). The lower CAD was also primarily on account of a decline in the trade deficit as decline in imports, specially gold imports, was sharper than that in exports. Gold imports amounted to $5.3 billion, against $15.8 billion in Q4 of 2012-13.
On a BoP basis, merchandise exports declined by 1.3 per cent to $83.7 billion in Q4 of 2013-14 as against an increase of 5.9 per cent in Q4 of 2012-13. Remittances by Indians employed overseas, amounted to $17.5 billion and provided sustained support to the BoP with a share of 12.6 per cent of current receipts. Care Ratings chief economist Madan Sabnavis said they expect the CAD to narrow down further in Q4 with the trade deficit declining further.
“Typically the invisibles account bring in a net amount of $28-30 billion. The trade balance has been in the range of $38-39 billion in the last 2 quarters and will be guided a lot by both movement in exports and imports. The Q3 does not capture fully the lower oil prices and hence the import bill may be expected to fall further. However, exports growth are not picking up which can keep the trade balance above $ 30 bn thus not allowing the deficit to turn to surplus,” he said.
