India’s current account deficit (CAD) at 1.4% of the gross domestic product (GDP) in third quarter of 2016-17
India’s current account deficit (CAD) in the third quarter (October to December) of 2016-17 increased to USD 7.9 billion (1.4% of GDP), from USD 7.1 billion (1.4% of GDP) in the third quarter of 2015-16.
The increase in CAD was primarily on account of a decline in net invisibles receipts.
Invisible receipts refer to business transactions related to services and other intangible items, which do not result in the transfer of physical goods.
Net invisible receipts were lower, mainly due to:
(i) fall in earnings from software and financial services and remittances by Indians employed abroad, and
(ii) higher outflow of payments on account of primary income (profit, interest and dividends).
CAD mirrors the difference between domestic savings and domestic investment, and conveys the extent of this gap that needs to be bridged by foreign savings.
- Developments in India’s Balance of Payments during the Third Quarter (October-December) of 2016-17, Mar 23, 2017, The Reserve Bank of India
- Monthly Policy Review (March 2017), PRS Legislative Research
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