New Delhi: India’s current account balance recorded a deficit of USD 10.5 billion, or 1.2 percent of the GDP, in the third quarter (October–December) of the current financial year 2023–24, showing a moderate improvement from the previous quarter as well as the same quarter in the previous year.

According to data released by the Reserve Bank of India (RBI) today, India’s current account deficit of USD 10.5 billion was lower than USD 11.4 billion in the previous quarter and USD 16.8 billion in the third quarter of 2022–23.

The merchandise trade deficit stood at USD 71.6 billion, slightly higher than the previous year’s Q3, it said, adding that service exports grew by 5.2 percent year-on-year, driven by rising exports of software, business, and travel services.

Net service receipts increased both sequentially and from a year ago, which helped cushion the current account deficit.

Foreign direct investment (FDI) recorded a net inflow of USD 4.2 billion, higher than the previous year’s Q3. RBI data stated that foreign portfolio investment saw a net inflow of USD 12.0 billion, significantly higher than the previous year.

External commercial borrowings to India recorded a net outflow of USD 2.6 billion, and non-resident deposits had a higher net inflow of USD 3.9 billion compared to the previous year.

There was an accretion of foreign exchange reserves (on a BoP basis) to the tune of USD 6.0 billion in Q3 of 2023–24 as compared with an accretion of USD 11.1 billion a year ago.