India's current account deficit sharply down at $1.4 bn in Oct-Dec 2019-20 quarter

India’s current account deficit (CAD) narrowed sharply to $1.4 billion (0.2 per cent of GDP) in Q3 of 2019-20 from $17.7 billion (2.7 per cent of GDP) in Q3 of 2018-19 and $6.5 billion (0.9 per cent of GDP) in the preceding quarter, ie, Q2 of 2019-20, according to data available with the Reserve Bank of India (RBI).

The contraction in the CAD was primarily on account of a lower trade deficit at $34.6 billion and a rise in net services receipts at $21.9 billion as compared with the corresponding period of the previous year, says an RBI release.
Net services trade receipts increased on the back of a rise in net earnings from computer, travel and financial services, RBI noted.
Private transfer receipts, mainly representing remittances by Indians employed overseas, increased to $20.6 billion, up 9.0 per cent from their level a year ago.
In the financial account, net foreign direct investment at $10 billion was higher than $7.3 billion in Q3 of 2018-19.
Foreign portfolio investment recorded net inflow of $7.8 billion – as against an outflow of $2.1 billion in Q3 of 2018-19 – on account of net purchases in both the debt and equity market.
Net inflow on account of external commercial borrowings to India was $3.2 billion as compared with $2.0 billion in Q3 of 2018-19.
There was an accretion of $21.6 billion to the foreign exchange reserves (on BoP basis) as against a depletion of $4.3 billion in Q3 of  2018-19.
The CAD narrowed to 1.0 per cent of GDP in April-December of 2019-20 from 2.6 per cent in April-December of 2018-19 on the back of a reduction in the trade deficit which shrank to $118.9 billion in April-December 2019-20 from $145.1 billion in April-December of 2018-19.
Net invisible receipts were higher in April-December of 2019-20, mainly due to increase in net services earnings and private transfer receipts.
Net FDI inflows at $32.1 billion in April-December of 2019-20 were higher than $24.3 billion in April-December of 2018-19.
Portfolio investment recorded a net inflow of $15.1 billion in April-December of 2019-20 as against an outflow of $11.9 billion a year ago.
In April-December 2019-20, there was an accretion of $40.7 billion of the foreign exchange reserves (on a BoP basis).
Meanwhile, foreign exchange reserves with the RBI, on a balance of payments basis (ie, excluding valuation effects) increased by $40.7 billion during April-December 2019 against a decrease of $17.5 billion during April-December 2018. Foreign exchange reserves in nominal terms (including the valuation effects) increased by $47.0 billion during April-December 2019 as against a decline of $29.0 billion during the same period of the preceding year.