MUMBAI: India’s current account deficit narrowed to just 0.7 per cent of gross domestic product in the fourth quarter of the fiscal year ended March 31, from 1.8pc in the year-earlier period as the nation’s merchandise trade deficit contracted and its services surplus rose.

The Reserve Bank of India said on Friday that the current account deficit was $4.6 billion, against $13.0bn in the quarter ended March 31, 2018.

The trade deficit is offset by private transfer receipts, mainly remittances back home by Indians employed overseas. They fell by 0.9pc to $17.9bn from a year earlier.

The central bank also said that foreign portfolio investment increased to a net inflow of $9.4bn in the fiscal fourth quarter from just $2.3bn in the year-earlier quarter.

For all of the fiscal year ended March 31, the current account deficit widened to $57.2bn, or 2.1pc of GDP, against $48.7bn, or 1.8pc in 2017-18. Some economists expect a further slight deterioration this financial year.

Published in Dawn, June 29th, 2019