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India’s Current Account Deficit Doubles as NRI Inflows Boost Surplus
India bought more goods from other countries than it sold in July, creating a larger trade gap.
This helped push its current account deficit to $7 billion.
Higher energy prices and imports contributed to the wider gap.
India also earned more from services and received more remittances.
At the same time, many non-resident Indians placed money in Indian banks through a special deposit scheme.
These deposits brought large amounts of foreign money into India.
As a result, India’s overall balance of payments showed a surplus of $20.8 billion.
Foreign investment also helped increase the surplus.
However, higher oil prices could continue to put pressure on India’s external finances.
India’s current account deficit doubled to $7 billion in July from $3.2 billion a year earlier.
The merchandise trade deficit widened to $31.7 billion, driven partly by higher global energy prices.
Large NRI deposits lifted India’s balance-of-payments surplus to $20.8 billion in July.
Net NRI deposits rose to $33.5 billion in July from $1 billion a year earlier.
India’s foreign exchange reserves reached a record $786 billion as of September 4.
- Who
- India, the Reserve Bank of India, non-resident Indian depositors, and foreign investors.
- What
- India’s current account deficit widened while large NRI deposits produced a substantially higher balance-of-payments surplus.
- Where
- India’s external accounts and banking system.
- When
- The data covers July and April-July; foreign-exchange reserves were reported as of September 4.
- Why
- Higher energy prices and imports widened the trade deficit, while NRI deposits, foreign direct investment, and portfolio inflows increased the capital-account surplus.
Key facts
- July current account deficit
- $7 billion, compared with $3.2 billion a year earlier
- July balance-of-payments surplus
- $20.8 billion
- July merchandise trade deficit
- $31.7 billion, compared with $28.2 billion a year earlier
- July net NRI deposits
- $33.5 billion, compared with $1 billion a year earlier
- April-July current account deficit
- $11.2 billion, compared with $6.6 billion a year earlier
- Foreign-exchange reserves
- $786 billion as of September 4
- FCNRB scheme inflows
- More than $127 billion in deposits before the window closed on August 31
Sources
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