India's current account slips into $2 billion deficit in May as trade gap widens

Kolkata: India's current account slipped into deficit in May from a surplus in April while the capital account deficit narrowed, monthly balance of payments data released by the Reserve Bank of India showed.

Overall, the balance of payment remained in a $4.4 billion deficit in May, as compared with a $6.6 billion deficit in the first month of the fiscal, amid the West Asia conflict that disrupted global crude oil supply fuelling risk of second order inflation.

The country's current account was in a $2 billion deficit in May as compared to a $4.7 billion surplus in April as merchandise deficit at $27.9 billion offset the remittances flow and the surplus in the services sector.


The services sector had a surplus of $15.7 billion while the net transfers, which includes remittances, foreign aids, pension and gifts, were at $13.6 billion, data showed.

On the capital account front, the deficit narrowed to $2.4 billion in May from a $11.3 billion deficit in April as foreign portfolio investors slowed the pace of offloading their investments from the local markets.

Foreign portfolio investors took out a net $4.7 billion in May compared to a $8.7 billion net outflow in April driven by the risk-off sentiment amid geopolitical uncertainties.

There was also a net foreign direct investment outflow of $0.1 billion in May against an $7.4 billion net inflows in April, the central bank data showed.