India’s CAD narrows sharply to USD 300 million on lower trade deficit

16 June, Mumbai

The Reserve Bank Thursday said that India’s current account deficit (CAD) narrowed sharply to 300 million US dollars, or 0.1 per cent of Gross Domestic Product, in the fourth quarter of 2015-16.

In a press Release on Preliminary data on country’s balance of payments (BoP) for the fourth quarter issued today, the Apex bank has said that for the entire 2015-16 fiscal, the difference between the inflow and outflow of foreign exchange or CAD shrank to 1.1 per cent of the GDP.

It stated that the contraction in CAD is primarily on account of lower trade deficit, which stood at 24.8 billion dollars compared to 31.6 billion dollars in the corresponding quarter a year ago.

It said that for the full fiscal 2015-16, CAD stood at 22.1 billion dollars, or 1.1 per cent of GDP, as against 26.9 billion dollars, or 1.8 per cent of GDP, in 2014-15, on the back of contraction in the trade deficit.

The country’s trade deficit narrowed to 130.1 billion dollars last fiscal from 144.9 billion dollars in 2014-15. The overall Balance of Payment (BoP) during the fiscal moderated to 17.9 billion dollars from 61.06 billion dollars in 2014-15.

The RBI has also mentioned that the Net Foreign Direct Investment inflows during the last fiscal stood at 36 billion dollars, up sharply by 15.3 per cent over the level in 2014-15.

Portfolio investment, however, recorded a net outflow of 4.5 billion dollars during the fiscal as against a net inflow of 40.9 billion dollars in 2014-15.