Get All Access for $5/mo

India's Current Account Deficit Marginally Widens to $9.7 Billion in April-June 2024: RBI Report The RBI attributed the year-on-year (YoY) rise in the CAD to an increase in the merchandise trade gap, which swelled to $65.1 billion in Q1 FY25 compared to $56.7 billion in the corresponding period a year ago.

By Entrepreneur Staff

You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

Freepik

India's current account deficit (CAD) widened slightly to $9.7 billion, or 1.1 per cent of the GDP, in the first quarter of FY25 (April-June 2024), as per data released by the Reserve Bank of India (RBI) on Monday. This marks an increase from $8.9 billion, or 1 per cent of GDP, in the same period last year. A current account deficit (CAD) is when a country's money going out exceeds the money coming in, due to a combination of factors including trade, investments and remittances. The CAD figure follows a surplus of $4.6 billion, or 0.5 per cent of GDP, recorded in the preceding quarter (January-March 2024).

External commercial borrowings (ECBs), a key indicator of corporate financing from overseas markets, fell to $1.8 billion in Q1 FY25, compared to $5.6 billion in the previous year. Remittances from the Indian diaspora, captured under private transfer receipts, saw an uptick, increasing to $29.5 billion from $27.1 billion in the year-ago period. This reflects a strong rise in money sent home by non-resident Indians (NRIs). Additionally, net inflows into NRI deposits amounted to $4 billion, significantly higher than the $2.2 billion seen in the same quarter last year.

The RBI attributed the year-on-year (YoY) rise in the CAD to an increase in the merchandise trade gap, which swelled to $65.1 billion in Q1 FY25 compared to $56.7 billion in the corresponding period a year ago. Despite the widening trade deficit, the services sector displayed robust growth during the quarter. Net services receipts rose to $39.7 billion, up from $35.1 billion in the same period last year. The RBI highlighted notable gains in key sectors, including computer services, business services, travel, and transportation services.

However, the net foreign portfolio investment (FPI) saw a significant decline, with inflows dropping sharply to $0.9 billion from $15.7 billion a year ago. In contrast, net foreign direct investment (FDI) inflows increased to $6.3 billion from $4.7 billion during the same period, indicating a steady flow of long-term investments into the country.

On a balance of payments (BoP) basis, India saw an accretion of $5.2 billion to its foreign exchange reserves in Q1 FY25, although this was much lower than the $24.4 billion recorded in the corresponding quarter of FY24. The RBI's report underscores the ongoing dynamics within India's external sector, with a widening trade gap offset by resilient service exports and FDI inflows.

Entrepreneur Staff

Entrepreneur Staff

Editor

For more than 30 years, Entrepreneur has set the course for success for millions of entrepreneurs and small business owners. We'll teach you the secrets of the winners and give you exactly what you need to lay the groundwork for success.
Branding

You Don't Need Thousands to Turn Your Business Idea Into Reality — Here's How I Did It on a College-Kid Budget

From creating the packaging designs online by myself to learning how to take professional product photos, I found ways to launch a company on a low budget. Here's how you can do it, too.

News and Trends

Dezy Raises USD 6 Mn New Funding to Expand Clinic Network in Bengaluru and Hyderabad

This round, part of a larger USD 8-10 million funding push, will primarily focus on scaling operations in Bengaluru and Hyderabad. Dezy had previously raised USD 23 million in a Series A round in 2022.

News and Trends

Reliance Retail Enters Quick Commerce Market, Set to Challenge Blinkit, Swiggy Instamart, and BigBasket

In an effort to disrupt the rapid commerce industry, Reliance has already started testing pilot programs through JioMart in Bengaluru and Navi Mumbai.

Business Ideas

63 Small Business Ideas to Start in 2024

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2024.

Marketing

Many Brands Risk Being Left Behind By Overlooking These Critical Advertising Steps

Learn how to use smart marketing tools and AI to optimize online advertising and maximize ad spend in today's competitive landscape.