Present A/c deficit eased in Q2 however could double in Q3 

India’s present account deficit (CAD) for the July-September interval or Q2 of 2024-25 moderated marginally to $11.2 billion or 1.2% of GDP from $11.3 billion or 1.3% of GDP a yr in the past, as per preliminary stability of funds (BoP) information launched by the Reserve Financial institution of India (RBI) on Friday.

Whereas the merchandise commerce deficit elevated to $75.3 billion from $64.5 billion in Q2 of 2023-24, internet companies receipts rose to $44.5 billion from $39.9 billion a yr in the past. “Companies exports have risen on a year-on-year foundation throughout main classes resembling laptop companies, enterprise companies, journey companies and transportation companies,” the RBI mentioned.

Within the monetary account, internet overseas direct funding (FDI) recorded an outflow of $2.2 billion in Q2 relative to a $0.8 billion outflow a yr in the past. in the identical interval final yr.

“India’s CAD got here in nicely under our expectation for Q2 FY25, offering some solace in gentle of the sharp weakening within the Rupee seen just lately,” remarked Aditi Nayar, chief economist at ICRA.

“Wanting forward, the preliminary estimate of a record-high commerce deficit in November might nicely bloat the present account deficit to 2.5%-2.7% of GDP within the present quarter. For 2024-25 as an entire, the deficit could print round 1.1%-1.2% of GDP,” she reckoned.

Web inflows from overseas portfolio investments elevated to $19.9 billion from $4.9 billion a yr in the past.

There was an $18.6 billion accretion to the overseas alternate reserves (on a BoP foundation) throughout the quarter, in comparison with simply $2.5 billion a yr in the past.

Web outgo on the first revenue account, primarily reflecting funds of funding revenue, dropped to $9.5 billion from $11.6 billion in Q2 final yr, whereas non-public switch receipts, primarily representing remittances by Indians abroad grew to $31.9 billion from $28.1 billion a yr in the past.

Web inflows from exterior business borrowings (ECBs) to India amounted to $5 billion in Q2, as towards outflows of $1.9 billion within the corresponding interval a yr in the past. Non-resident deposits recorded internet inflows of $6.2 billion, up from $3.2 billion a yr in the past.

BoP throughout H1FY25

Throughout the April-September (H1FY25 ) interval India’s present account deficit elevated to $21.4 billion (1.2% of GDP) in as in contrast with $20.2 billion (1.2% of GDP) in similar interval final yr (H1:FY24).

Web invisibles receipts at $119 billion had been increased in H1FY25 as in contrast with $101 billion a yr in the past, totally on account of upper internet companies receipts, RBI mentioned.

Web FDI inflows at $4.4 billion in H1FY25 was increased than $3.9 billion in H1FY24. FPI recorded virtually flat internet inflows of $20.8 billion in interval as in contrast with internet inflows of $20.7 billion a yr in the past.

In H1:FY25, there was a rise of $23.8 billion to the overseas alternate reserves (on a BoP foundation) as in contrast with a rise $27 billion a yr in the past.

International alternate reserves in nominal phrases (i.e., together with valuation results) elevated by $59.4 billion throughout April-September 2024-25 as in contrast with a rise of $9.3 billion in the identical interval of earlier yr, as per RBI information.

The valuation achieve, primarily reflecting the depreciation of the U.S. greenback towards main currencies and better costs of gold amounted to $35.5 billion throughout April-September 2024 interval as towards a valuation lack of $17.7 billion throughout April-September 2023, the RBI mentioned.