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Mumbai: India’s current account deficit (CAD) widened to 2.9% of the GDP in the second quarter of the fiscal, against 1.1% in the year-ago period, mainly due to a large trade deficit, the RBI said on Friday.

The CAD, or the difference between outflow and inflow of foreign exchange in the country’s current account, was $19.1 billion during the quarter ended September 30, 2018. It increased from $6.9 billion, or 1.1% of GDP, in the second quarter of 2017-18. The CAD stood at $15.9 billion (2.4% of GDP) in the April-June quarter.

“India’s current account deficit (CAD) at $ 19.1 billion (2.9% of GDP) in Q2 of 2018-19 increased from $6.9 billion (1.1% of GDP) in Q2 of 2017-18 and $15.9 billion (2.4% of GDP) in the preceding quarter," the RBI said.

The CAD increased to 2.7% of GDP in the first half of 2018-19, from 1.8% in the corresponding period of 2017-18, on the back of widening of the trade deficit.

According to the central bank, the widening of the CAD on a year on year basis was primarily due to a higher trade deficit of $50 billion, compared with $32.5 billion a year ago.

RBI’s preliminary data on India’s balance of payments (BoP) for July-September 2018-19 further revealed that net services receipts increased by 10.2% on a year on year basis, mainly on the back of a rise in net earnings from software and financial services.

Private transfer receipts, mainly representing remittances by Indians employed overseas, amounted to $20.9 billion during the quarter, a 19.8% increase from a year ago.

In the financial account, net foreign direct investment at $7.9 billion in the second quarter of 2018-19 moderated from $12.4 billion in the same period last fiscal.

RBI said portfolio investment recorded a net outflow of $1.6 billion, compared with an inflow of $2.1 billion in the second quarter last year, on account of net sales in both debt and equity markets.

Further, net receipts on account of non-resident deposits increased to $3.3 billion in the second quarter of 2018-19, from $0.7 billion a year ago.

In July-September of the current fiscal, there was a depletion of $1.9 billion of foreign exchange reserves (on BoP basis), against an accretion of $9.5 billion in the year-ago period.

This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.

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