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India current account deficit widens sharply on higher imports

India current account deficit widens sharply on higher imports

MUMBAI: India’s October-December current account deficit widened sharply from a year earlier, driven by higher imports, data from the Reserve Bank of India showed on Friday.

The deficit widened to 2 percent of gross domestic product, or $13.5 billion, up from 1.4 percent, or $8 billion, in the corresponding period a year ago.

“The widening of the deficit on a year-on-year basis was primarily on account of a higher trade deficit brought about by a larger increase in merchandise imports relative to exports,” the RBI said in a statement on India’s balance of payments.

India’s trade deficit widened to $44.1 billion from $33.3 billion a year ago while the balance of payments posted a surplus of $9.4 billion in the October-December period, compared with a deficit of $1.2 billion a year ago, helped by a stronger capital account.

The capital and financial account surplus rose to $12.6 billion in the December quarter from $7.3 billion a year ago, bolstered by robust foreign portfolio inflows worth $5.3 billion during this period, the RBI said.

“The current account deficit is expected to widen in the next fiscal year 2018/19 on firm oil prices,” said A Prasanna, chief economist at ICICI Securities Primary Dealership in the financial capital of Mumbai.