India's current account deficit narrowed to 1.3% of GDP in Q3 FY16: RBI

India's current account deficit in the October-December quarter narrowed to $7.1 billion, or 1.3 per cent of the country's gross domestic product, from $8.7 billion, or 1.7 per cent of GDP a quarter earlier, the Reserve Bank of India stated in a release today.

Preliminary data on India's balance of payments for the fiscal third quarter, ie, October-December 2015-16, showed the country had a balance of payments surplus in October-December of about $4.1 billion, compared to a deficit of $856 million in July-September.

The contraction in CAD was primarily on account of a lower trade deficit ($34.0 billion) than in Q3 of last year ($38.6 billion) and $37.4 billion in the preceding quarter.

Net services receipts moderated on a year-on-year basis largely due to fall in export receipts in transport and financial services, though there has been marginal improvement over the preceding quarter, RBI stated.

Private transfer receipts, mainly representing remittances by Indians employed overseas, amounted to $15.8 billion, a decline from their level in the preceding quarter as well as from a year ago.

After moderating in Q2, net foreign direct investment again picked up and stood at $10.8 billion in Q3.

There has been a marginal net outflow of $0.2 billion in portfolio investment in Q3 of 2015-16 against net outflow of $3.5 billion in the preceding quarter; equity outflows in Q3 were almost offset by inflows into the debt segment, data showed.

Non-resident Indian (NRI) deposits moderated significantly in Q3 of 2015-16 over their level in Q3 last year as well as the preceding quarter.

Foreign exchange reserves (on a BoP basis) increased by $4.1 billion in Q3 of 2015-16.

On a cumulative basis, the CAD narrowed to 1.4 per cent of GDP in April-December 2015-16 from 1.7 per cent in the corresponding period of 2014-15, on the back of the contraction in the trade deficit.

India's trade deficit narrowed to $105.6 billion in April-December 2015 from $113.4 billion during the same period of 2014-15.

Net invisible receipts declined in April-December 2015, even though moderation in both net services earnings and private transfer receipts was partly offset by a lower net outflow of primary income (profit, interest and dividends).

Net FDI inflows during April-December 2015 rose sharply by 24.8 per cent over the level during the corresponding period of the previous year.

Portfolio investment, however, recorded a net outflow $3.7 billion during April-December 2015 as against a net inflow of $28.5 billion last year.

In April-December 2015, there was an accretion of $14.6 billion to foreign exchange reserves (on a BoP basis) compared with $31.3 billion in the corresponding period of 2014-15, RBI figures showed.