India's current account deficit (CAD) narrowed further in the final quarter of 2019 on the back of a contraction in the trade deficit and rise in net services receipts, the central bank said on Thursday.
The CAD also declined to 0.2% of gross domestic product in the third quarter of the fiscal year ending this month from 2.7% in the year-ago period. On a quarterly basis, it shrank from 0.9% of GDP in Q2.
The deficit measures the difference between the value of a country's imported and exported goods and services.
"The contraction in the CAD (in 2019 Q4) was primarily on account of a lower trade deficit at $34.6 billion and a rise in net services receipts at $21.9 billion," the Reserve Bank of India (RBI) said in a statement.
India's monthly trade deficit however widened to $15.17 billion in January compared with $14.73 billion a year earlier, and sharply higher versus the deficit of $11.25 billion in December, trade ministry data last month showed.
Data last month showed annual economic growth slowed to a a more-than-six-year low of 4.7% in the December quarter.
The current account deficit stood at $1.4 billion in the last quarter of 2019 versus $17.7 billion a year ago. The merchandise trade deficit narrowed to $34.6 billion from $49.3 billion, the central bank said.
Balance of payments stood at a surplus of $21.6 billion in Q3 of 2019/20 compared with a deficit of $4.3 billion a year ago, data showed. However, the surplus ballooned from $5.1 billion seen in Q2.
Foreign portfolio investment recorded net inflow of $7.8 billion in Q3 of 2019/20 - as against an outflow of $2.1 billion in the same quarter last year – on account of net purchases in both the debt and equity market, the RBI said.