India’s Q2FY22 current account deficit at $9.6 bn

Wider merchandise trade deficits pulled India’s Q2FY22 current account into the negative territory, official data showed on Friday.

The current account swung into negative territory with a deficit of $9.6 billion in Q2FY22 from a surplus of $6.6 billion in the preceding quarter.

On a YoY basis, the country’s Balance of Payments was in surplus of $15.3 billion in Q2FY21.

“The deficit in the current account in Q2:2021-22 was mainly due to widening of trade deficit to $44.4 billion from $30.7 billion in the preceding quarter and an increase in net outgo of investment income,” the RBI said in a statement.

“Net services receipts decreased marginally over the previous quarter but increased on a year-on-year (yoy) basis, on the back of robust performance of the exports of computer and business services.”

However, private transfer receipts, mainly representing remittances by Indians employed overseas, amounted to $21.1 billion, an increase of 3.7 per cent from their level a year ago.

“Net outgo from the primary income account, mainly reflecting net overseas investment income payments, increased sequentially as well as on a yoy basis.”

In the financial account, net foreign direct investment recorded an inflow of $9.5 billion, lower than $24.4 billion a year ago.

“Net foreign portfolio investment was $3.9 billion as compared with $7 billion in Q2:2020-21.

“Net external commercial borrowings to India recorded inflow of $4.1 billion in Q2:2021-22 as against an outflow of $3.7 billion a year ago.”

The net inflow on account of non-resident deposits decreased to $0.8 billion from $1.9 billion in Q2FY21.

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