Millennium Post

Q2 CAD up to 2.1% of GDP from 1.2% last fiscal; gold imports soar

Q2 CAD up to 2.1% of GDP from 1.2% last fiscal; gold imports soar
The current account deficit (CAD) is the net difference between inflows and outflows of foreign currencies.

"The increase in CAD was primarily on account of higher trade deficit contributed by both a deceleration in export growth and increase in imports," the RBI said.

Merchandise exports growth dipped to 4.9 per cent in the second quarter, while there was an 8.1 per cent surge in imports on higher inbound gold shipments.

For the first six months of 2014-15, the current account gap narrowed to 1.9 per cent or $17.9 billion from 3.1 per cent in the same period a year-ago, the RBI data showed. There was a net accretion of $6.9 billion to the forex reserves during the reporting quarter as against a drawdown of $10.4 billion.

Net inflows of NRI deposits at $4.1 billion in Q2 were lower than the $8.2 billion notched up during the days of rupee fall in the year ago period, the RBI said. External commercial borrowings by enterprises at $1.4 billion in were higher than $1.3 billion year-on-year.

CAD 1.2 per cent in the second quarter of the previous fiscal on unconventional moves to arrest the rupee slide. It stood at 1.7 per cent for the preceding June quarter this year. On services, the net services improved by 3.4 per cent on a pick-up in telecommunications, computer and information services, the RBI said.

Net outflows under trade credits and advances were much lower at $0.2 billion as against $1.9 billion in the year ago period. Net outflows on primary income, which includes profits, dividends and interest, were at $6.9 billion in Q2, up from the $6.3 billion in the year-ago period. The gross private transfer receipts at $17.4 billion were marginally higher as compared with the corresponding quarter of 2013-14..

The FDI was stable, RBI said. The boom in the markets resulted in the portfolio investments going into the positive territory on a net basis, the RBI said, adding that the portfolio investment stood at $9.8 billion for the quarter, as against the outflow of $6.6 billion in the last quarter.

On the loans front, there was a net outflow of $4.6 billion during the quarter due to higher repayments of overseas borrowings and a build-up of their overseas foreign currency assets, RBI said.
PTI

PTI

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