Summary :
India's current account deficit improved significantly to 0.7% of GDP ($23.2 billion) in FY24, down from 2% of GDP ($67 billion) the previous year, due to a reduced merchandise trade deficit, according to the Reserve Bank of India. The current account balance posted a surplus of 0.6% of GDP in Q4 FY24, reversing earlier quarterly deficits.
India's current account deficit fell to 0.7% of GDP ($23.2 billion) in FY24 from 2% of GDP ($67 billion) the previous year, driven by a lower merchandise trade deficit, the Reserve Bank of India reported on Monday.
Foreign portfolio investment experienced a net inflow of $44.1 billion in FY24, reversing an outflow of $5.2 billion in FY23. In contrast, net FDI inflow decreased to $9.8 billion in FY24 from $28 billion in FY23.
India's foreign exchange reserves increased by $63.7 billion in FY24 on a Balance of Payment basis, according to the RBI statement.
Net invisibles receipts increased in FY24 due to higher services and transfers. Net invisibles refer to the balance of exports and imports of intangible goods and services over a specified period.
Current account surplus driven by services
In the final quarter of FY24, the South Asian country reported a current account surplus of 0.6% of GDP, up from a deficit of 1% in Q3 FY24 and 0.2% in Q4 FY23.
Net services receipts of $42.7 billion contributed to the current account surplus in Q4 FY24, up from $39.1 billion in Q4 FY23. Services exports increased by 4.1% year-on-year in Q4, driven by higher exports of software, travel, and business services.
The merchandise trade deficit in Q4 FY24 was $50.9 billion, down from $52.6 billion in Q4 FY23. Foreign portfolio investments saw a net inflow of $11.4 billion in Q4 FY24, compared to a net outflow of $1.7 billion in the same period a year ago. Net FDI inflow was $2 billion in Q4 FY24, reversing a net outflow of $1.7 billion in Q4 FY23.
Non-resident deposits recorded a net inflow of $5.4 billion in Q4, up from $3.6 billion in the same period a year ago. Remittances from Indians employed overseas, categorized under private transfer receipts, increased by 11.9% year-on-year to $32 billion.
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