MUMBAI: This would also mark a smart turnaround from the record high CAD of 4.8percent of GDP in FY 2013, which sparked the country's worst currency crisis in more than two decades.
The current account deficit (CAD) doubled to $8.2 billion or 1.6percent of the GDP during December quarter on year-on year basis, despite an improvement from the preceding quarter level, according to RBI data released.
During October-December period of last fiscal, the CAD -- which is the gap between foreign exchange earned and spent -- stood at $4.2 billion or 0.9percent of GDP.
On sequential basis, however, the CAD narrowed from $10.1 billion or 2percent of GDP in the September quarter.
It has narrowed to 1.7percent for the first nine months of the current fiscal, driven down by lower oil prices and higher services exports that offset the dip in merchandise shipments.
Analysts have, however, have already pencilled in a current account surplus of over 1.5percent of GDP in the March quarter on account of the massive fall in crude prices and also other commodities. Crude at present is trading around 40percent lower than last year's.
According to the Reserve Bank data, in the April-December period of last fiscal, CAD stood at $31.1 billion or 2.3percent of GDP.
Many analysts are of the opinion that the continuing decline in crude prices will see the country posting a current account surplus in the current March quarter, which would be the first surplus since the March quarter of 2007.
This would also mark a smart turnaround from the record high CAD of 4.8percent of GDP in FY 2013, which sparked the country's worst currency crisis in more than two decades.
Meanwhile, the RBI data showed that the balance of payments stood at a surplus of $13.2 billion during December quarter, which is a fifth consecutive quarter of surplus.
Similarly, the capital and financial account was also in surplus at $10 billion, according to the data.
The quarter-on-quarter decline in CAD is a positive surprise," Aditi Nayar, senior economist with rating agency Icra, said.
A higher services surplus, lower outflows of primary income and smaller net oil imports offset the considerable rise in gold imports between second and the third quarter, she added.
"A further moderation in the net oil import bill is expected to contribute to a small current account surplus in the ongoing quarter, helping to restrict the current account deficit below $28 billion or 1.4percent of GDP in FY15," Nayar said.
"If global commodity prices do not register a sharp rebound, CAD deficit is expected to print below 1percent of GDP in FY16," she added.
In a note earlier this year, Japanese brokerage, Nomura had said with a steep fall in global crude oil prices, the country may report its first current account surplus in over seven years at 1.5percent of GDP in the ongoing quarter.
The merchandise trade deficit widened to $39.2 billion during the reporting quarter as exports declined 7.3percent against a 4.5percent dip in imports.
"The decline in merchandise exports remains a concern, particularly given the uncertain growth outlook for key trading partners such as the euro zone and Japan," Nayar said.
The inward remittances stood at $17.5 billion and supported the balance of payments with a 12.6percentcent share in the overall receipts, RBI data showed.
The net inflows of foreign direct and portfolio investments were somewhat lower compared to the September quarter.
Net loans availed by banks rose by $6.6 billion in December quarter mainly on account of inward repatriations of assets held abroad by banks, RBI said.
There was a net accretion of $13.2 billion to the foreign exchange reserves during the quarter, which was double from $6.9 billion in the preceding quarte,r but lower than the special non-residents' and overseas borrowings by banks boosted the figure last year.
For the April-December period, the RBI said there is a considerable improvement in the BoP on account of higher growth in merchandise exports and a marginal rise in imports.
The trade deficit narrowed to $112.5 billion in the April-December period from $116.9 billion a year-ago. The net inflows under the capital and financial account rose to $61.7 billion in the first nine months of the fiscal up from $39.6 billion in the year-ago period.
The total accretion to the forex kitty for the first three quarters was $31.3 billion against a low $8.4 billion in the previous fiscal.
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