India's current account deficit balloons to 2.9% of GDP in Q2 FY19

India’s current account deficit (CAD) stood at $19.1 billion, forming 2.9 per cent of the country’s gross domestic product (GDP) in Q2 of 2018-19, up from $6.9 billion (1.1 per cent of GDP) in Q2 of 2017-18, and $15.9 billion (2.4 per cent of GDP) in the preceding quarter.

The widening of the CAD on a year-on-year (y-o-y) basis was primarily on account of a higher trade deficit at $50.0 billion as of the quarter ended September 2018 compared with $32.5 billion during the period a year ago.
Net receipts from services trade increased by 10.2 per cent on a y-o-y basis, mainly on the back of a rise in net earnings from software and financial services.
Private transfer receipts, mainly representing remittances by Indians employed overseas, amounted to $20.9 billion, increasing by 19.8 per cent from their level a year ago.
In the financial account, net foreign direct investment at $7.9 billion in Q2 of 2018-19 moderated from $12.4 billion in Q2 of 2017-18.
Portfolio investment recorded net outflow of $1.6 billion in Q2 of 2018-19, compared with an inflow of $2.1 billion in Q2 last year, on account of net sales in both the debt and equity markets.
Net receipts on account of non-resident deposits increased to $3.3 billion in Q2 of 2018-19 from $0.7 billion a year ago.
In Q2 of 2018-19, there was a drawdown of $1.9 billion of the foreign exchange reserves (on BoP basis) against an accretion of $9.5 billion in Q2 of 2017-18.
The CAD increased to 2.7 per cent of GDP in H1 of 2018-19 from 1.8 per cent in H1 of 2017-18 on the back of widening of the trade deficit.
India’s merchandise trade deficit increased to $95.8 billion in H1 of 2018-19 from $74.4 billion in H1 of 2017-18.
Net invisible receipts were higher in H1 of 2018-19 mainly due to increase in net services earnings and private transfer receipts.
Net FDI inflows in H1 of 2018-19 moderated to $17.7 billion from $19.6 billion in H1 of 2017-18.
Portfolio investment recorded a net outflow of $9.8 billion in H1 of 2018-19 against an inflow of $14.5 billion a year ago.
In H1 of 2018-19, there was a depletion of $13.2 billion in the foreign exchange reserves (on a BoP basis).