CAD Dips To 1.7% In Q1 As Trade Deficit Declines

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CAD Dips To 1.7% In Q1 As Trade Deficit Declines
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India's current account deficit (CAD) narrowed to 1.7% of GDP in the April-June quarter of FY2014-15. This was mainly due to a reduction in trade deficit and fall in gold imports.

"The lower CAD was primarily on account of a contraction in the trade deficit contributed by both a rise in exports and a decline in imports," RBI said.

CAD narrowed $7.8 billion (1.7% of GDP) from $21.8 billion (4.8% of GDP) in the year-ago period.

There was a huge fall of 57.2% in gold imports, amounting to $7 billion, which is lower than $16.5 billion in the April-June quarter of FY2013-14, RBI said.

The trade deficit decreased by 31.4% to $34.6 billion in Q1 of FY2014-15 as compared to $50.5 billion in Q1 of FY2013-14.
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The CAD had reached $87.8 billion in FY2012-13 due to a sharp increase in gold imports.

According to the Balance of Payments (BoP) data, on net basis, both foreign direct investment and portfolio investment recorded inflows in the first quarter of 2014-15.

"There was a net accretion of $11.2 billion to India's foreign exchange reserves in the first quarter of 2014-15 as against a draw down of $0.3 billion in Q1 of 2013-14," RBI said.