India’s current account deficit (CAD) narrowed to $1.3 billion or 0.2 per cent of GDP in the January-March quarter of FY23, mainly due to moderation in the trade deficit and a robust increase in services exports, RBI data showed on Tuesday. 

“India’s CAD decreased to $1.3 billion (0.2 per cent of GDP) in Q4 of 2022-23 from $16.8 billion (2 per cent of GDP) in Q3:2022-23, and $13.4 billion (1.6 per cent of GDP) a year ago,” the RBI said. 

CAD is a key indicator of the balance of payment of a country. 

The sequential decline in CAD in the fourth quarter of the last fiscal was mainly on account of a moderation in the trade deficit to $52.6 billion from $71.3 billion in the preceding quarter, coupled with robust services exports. 

Net services receipts increased, sequentially and on a year-on-year (y-o-y) basis, on the back of a rise in net earnings from computer services, the RBI said. 

There was an accretion to the foreign exchange reserves (on a BoP basis) to the tune of $5.6 billion against depletion of $16 billion in Q4 2021-22. 

For 2022-23, the current account balance recorded a deficit of 2 per cent of GDP compared to a deficit of 1.2 per cent in 2021-22 as the trade deficit widened to $265.3 billion from $189.5 billion a year ago.