India's current account deficit narrows to 2% of GDP in June quarter

India's current account deficit (CAD) narrowed to $14.3 billion, or 2 per cent of gross domestic product (GDP) in the June quarter (Q1), from $15.8 billion, or 2.3 per cent a year ago, according to official data released on Monday.

The CAD, which is the net of foreign exchange inflows and outflows, had stood at $4.6 billion, or 0.7 per cent, in March quarter.

"The CAD eased on a year-on-year (y-o-y) basis, mainly on account of higher invisible receipts at $ 31.9 billion as compared with $ 29.9 billion a year ago," the Reserve Bank of India said in a statement.

In Q1 of FY20, net services receipts increased by 7.3 per cent on a y-o-y basis, driven by spurt in net earnings from travel, financial services and telecommunications, computer and information services, RBI data showed.

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Private transfer receipts, mainly representing remittances by Indians employed overseas, rose to $19.9 billion, increasing by 6.2 per cent from their level a year ago.

In the financial account, net foreign direct investment was $ 13.9 billion in Q1FY20, as against $9.6 billion in Q1 of FY19.

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Foreign portfolio investment (FPIs) remained net seller as they pulled out a net sum of $3.3 billion from the Indian capital markets in April-June period. FPIs withdrew a net amount of $8.1 billion from debt and equity markets and infused $4.8 billion into the market.

Net inflow on account of external commercial borrowings to India stood at $6.3 billion in Q1FY20 versus an outflow of $1.5 billion a year ago. In Q1 of FY20, there was an accretion of $14 billion to the foreign exchange reserves as against a depletion of $11.3 billion in Q1FY19.

Edited by Chitranjan Kumar