Q3 CAD narrows to 0.9% of GDP at $4.2 billion

NEW DELHI: The Current Account Deficit (CAD) for the third quarter of the current financial year narrowed to $4.2 billion versus $5.2 billion quarter-on-quarter. The October to December CAD stands at 0.9% of GDP versus 1.2% QoQ.

The CAD for the April-December period now stands at $31.1 billion versus $69.8 billion YoY. This translates into the CAD being at 2.3% of GDP versus 5.2% YoY.

On a BoP basis, merchandise exports increased by 7.5 per cent to $79.8 billion in Q3 of 2013-14 (3.9 per cent in Q3 of 2012-13) on the back of significant growth especially in the exports of engineering goods, readymade garments, iron ore, marine products and chemicals.

On the other hand, merchandise imports at $112.9 billion, recorded a decline of 14.8 per cent in Q3 of 2013-14 as against an increase of 10.4 per cent in Q3 of 2012-13. Decline in imports in Q3 was primarily led by a steep decline in gold imports, which amounted to $3.1 billion as compared to $17.8 billion in Q3 of 2012-13 and $3.9 billion in Q2 of 2013-14.

As a result, the merchandise trade deficit (BoP basis) contracted by around 43 per cent to $33.2 billion in Q3 of 2013-14 from $58.4 billion a year ago.

On a BoP basis, there was a net accretion of $19.1 billion to India's foreign exchange reserves in Q3 of 2013-14 as compared to a drawdown of $10.4 billion in the preceding quarter.

On BoP basis, foreign exchange reserves increased by $8.4 billion during April-December 2013 as compared with an accretion of $1.1 billion in April-December 2012.