India’s CAD decreased to $ 13.4 billion (1.5 per cent of GDP) in Q4’2021-22 from $ 22.2 billion (2.6 per cent of GDP) in Q3’2021-22 according to the preliminary estimates released by the Reserve Bank of India on Wednesday. But it was higher than $ 8.1 billion (1.0 per cent of GDP) in Q4’2020-21 on account of a sharper rise in trade deficit
But major component of `Invisibles’ reflecting services and investment income flows did better sequentially as well as year-on-year basis. Net services receipts increased, both sequentially and on a year-on-year (y-o-y) basis, on the back of a rise in net earnings from computer and business services, the RBI said in a release.
Private transfer receipts, mainly reflecting remittances by Indians employed overseas, increased to $ 23.7 billion, up by 13.4 per cent from their level a year ago. Net outgo from the primary income account, largely reflecting net income payments on foreign investment, decreased sequentially as well as on a y-o-y basis.
For the entire fiscal year, the current account balance recorded a deficit of 1.2 per cent of GDP in 2021-22 as against a surplus of 0.9 per cent in 2020-21 as the trade deficit widened to $189.5 billion from $102.2 billion a year ago. But most market analysts had forecast higher CAD for the fiscal as crude and commodity prices surged during the year. Net invisible receipts were higher in 2021-22 due to increase in net exports of services and net private transfer receipts, even though net income outgo was higher than a year ago. Overall balance of payments surplus in FY’22 almost halved to $47.5 billion from $87.3 billion a year ago.
On a balance of payments basis (i.e., excluding valuation effects), foreign exchange reserves increased by $ 47.5 billion during 2021-22 as compared with $ 87.3 billion during 2020-21 according to the data on sources of Variation in Foreign Exchange Reserves in India during 2021-22 released by the RBI on Friday. Foreign exchange reserves in nominal terms (including valuation effects) increased by $ 30.3 billion during 2021-22 as compared with $ 99.2 billion during 2020-21.