Current account balance posts surplus of 0.6% of GDP in Jan-Mar 2024: RBI

India's current account balance posted a surplus of US$ 5.7 billion or 0.6% of gross domestic product (GDP) during the fourth quarter of FY24, after a gap of 10 quarters. This was driven by a surge in services exports, as per the latest data released by the Reserve Bank of India (RBI). The current account deficit (CAD) had stood at US$ 1.3 billion (0.2% of GDP) during the fourth quarter of the previous financial year. For the full FY24, the CAD moderated to US$ 23.2 billion (0.7% of GDP) from US$ 67 billion (2% of GDP) in FY23, primarily due to a lower merchandise trade deficit.

Chief economist at ICRA, Ms. Aditi Nayar, noted that the turnaround to a surplus in fourth quarter of FY24 from a deficit in the year-ago period was mainly driven by a narrowing in the merchandise trade deficit to a 10-quarter low of US$ 50.9 billion. The net services receipt and private transfer receipts also contributed to the surplus in the current account balance during the fourth quarter. The CAD is expected to rise slightly to 1-1.2% of GDP in FY25, owing to a widening in the merchandise trade deficit. However, according to analysts, it is expected to remain eminently manageable, supported by large FPI-debt inflows on account of the bond index inclusion starting in June 2024.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.