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India Oct-Dec CAD may ease to $18 bln from Jul-Sep’s 21-quarter high

Thursday, Feb 21

 

NEW DELHI – India's current account deficit may have eased to around $18 bln in Oct-Dec from a 21-quarter high of $19 bln in Jul-Sep due to a smaller merchandise trade deficit, according to provisional data.

 

In Oct-Dec 2017, India's current account deficit was $13.7 bln.

 

The Reserve Bank of India is scheduled to release the balance of payments data for the third quarter of 2018-19 (Apr-Mar) by Mar 29.

 

In Oct-Dec, India's merchandise trade deficit declined 6% from the previous quarter to $46.9 bln. The decline was on account of the import bill falling 4% in the quarter ended December compared with a 2% drop in exports.

 

The sequential fall in India's import bill in Oct-Dec was despite a 9% quarter-on-quarter increase in oil imports at $38 bln. On the other hand, the average price of India's crude oil basket was $67.8 per barrel in Oct-Dec, 9% lower from Jul-Sep. However, oil prices had peaked at $80.1/bbl in October.

 

Along with oil imports, India's gold imports also fell in Oct-Dec, down 24% quarter-on-quarter at $7.0 bln.

 

On the services front, the surplus reduced 2% from Jul-Sep to $19.8 bln.

 

Apart from merchandise and services trade balance, the other two components of the current account balance are primary and secondary income. While primary income includes compensation of employees and investment income, secondary income comprises items such as workers' remittances, among other transfers.

 

Economists expect the current account deficit for the full year to rise to around $70 bln, or 2.5% of GDP, from $49 bln in 2017-18. The Interim Budget for 2019-20 had also pegged the current account deficit for 2018-19 at 2.5% of GDP.

 

For the half year ended September, the current account deficit stood at $35 bln, nearly 60% higher than in the corresponding period last year.  End

 

US$1 = 71.04 rupees

 

Reported by Siddharth Upasani

Edited by Avishek Dutta

 

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