Current account deficit widens

Current account deficit in the April to June quarter widened to US$13.7bn from US$4.5bn in the year earlier, the RBI said. The deficit widened compared to the nearly US$13bn reported in the January to March quarter, which too was a record. The trade deficit for the first quarter of FY11 was higher at US$34.2bn compared with US$25.6bn in the year-earlier period. The merchandise deficit was also higher than the US$31.5bn reported in the January-March quarter. Strong overseas capital inflows helped keep the overall Balance of Payments (BoP) to remain in a surplus at US$3.74bn, compared with US$2.1bn in the January to March quarter and a surplus of about US$100mn in the year-ago period.



The capital account surplus jumped to US$17.5bn in April-June from US$4.6bn in the same quarter in 2009-10 and US$16.1bn in the January-March period. The capital account surplus increased year-on-year, mainly due to short-term credit, external commercial borrowings, external assistance and banking capital. Net invisible receipts, which mostly include earnings from services exports, were US$20.5bn in the quarter to June compared with US$21.2bn in the year-ago period. However, sequentially they were higher than the US$18.5bn in the last quarter of FY10.