Why in news
India’s current account deficit increased to $9.7 billion (1.1% of GDP) in Q1 FY25, up from $8.9 billion (1% of GDP) in the same period last year.
This marks a significant shift from a surplus of $4.6 billion (0.5% of GDP) in Q4 FY24.
The rise in CAD is mainly attributed to an increase in the merchandise trade deficit, which reached $65.1 billion in Q1 FY25, up from $56.7 billion a year earlier
Net services receipts rose to $39.7 billion from $35.1 billion, indicating growth in income from services.
Private transfers, primarily remittances from Indians abroad, increased to $29.5 billion, up from $27.1 billion.
Net FDI inflows rose to $6.3 billion in Q1 FY25, compared to $4.7 billion in the previous year.
Despite the widening CAD, India’s balance of payments remained stable, with a net increase of $5.2 billion to foreign exchange reserves.
COMMENTS