'CAD nearly doubles to 4.3% in Q3'
Agencies : Mumbai, Sat Mar 31 2012, 10:33 hrs
The current account deficit (CAD) nearly doubled to USD 19.6 billion during the December quarter or 4.3 per cent against 2.3 per cent or USD 10.1 billion a year ago, following the sharp fall in exports, while inward shipments remained robust, the Reserve Bank said today.
"The balance of payment (BoP) experienced a significant stress in Q3 as trade deficit widened and capital inflows fell far short of financing requirements resulting in significant drawdown of foreign exchange reserves," the central bank said in its quarterly preliminary report on BoP.
On a BoP basis, merchandise exports recorded a lower growth of 7.9 per cent, y-o-yr, in Q3 of FY12 compared to 39.9 per cent year ago. However, imports rose 22 per cent in the same period, though it was marginally down from 24.7 per cent in the same quarter of the preceding year.
"With export growth remaining lower than the import growth, trade deficit widened to USD 47.7 billion in Q3 against USD 31.4 billion year ago," the RBI report said.
Net services exports in Q3 rose by 20.3 per cent against 47.5 per cent in the corresponding period last year while net secondary income (private transfers) receipts rose by 30.6 per cent to USD 17.5 billion from USD 13.4 billion, the report said.
Primary income account (mainly investment income) showed a net outflow of USD 4.5 billion in Q3, which was unchanged.
Capital and financial account (excluding changes in foreign exchange reserves showed a significantly lower inflow of USD 8.2 billion against USD 14 billion. As a result, there was a drawdown of foreign exchange reserves of USD 12.8 billion (excluding valuation) during Q3 as against an increase of USD 4.0 billion in the corresponding quarter last fiscal.
During the April-December period of this fiscal, the CAD rose by 70 basis points to USD 53.7 billion or 4 per cent of GDP from USD 39.6 billion or 3.3 per cent of GDP) in the same period last fiscal, largely reflecting higher trade deficit on account of imports of oil and bullion, said the report.
Net inflows under capital and financial account (excluding changes in reserve assets) stood at USD 47.5 billion, which was down in the April-December period against USD 52.9 billion a year ago.
There was also a drawdown of reserves to the extent of USD 7.1 billion in the first three quarters against an accretion of USD 11.0 billion a year ago.
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