India’s current account deficit (CAD) declined to $23.2 billion (0.7 per cent of GDP) during 2023-24 from $67 billion (2 per cent of GDP) during the previous year due to a lower merchandise trade deficit, the RBI said on Monday.

The fall in the current account deficit (CAD) reflects a strengthening of the economic fundamentals as India closed the financial year on March 31, with an accretion of $63.7 billion to foreign exchange reserves.

Net invisibles receipt was higher during 2023-24 than a year ago, primarily on account of services and transfers.

Portfolio investment in the capital markets recorded a net inflow of $44.1 billion against an outflow of $5.2 billion a year ago.

Net FDI inflow was $9.8 billion during 2023-24 as compared with $28 billion in 2022-23.

The RBI data also showed that India’s current account balance recorded a surplus of $5.7 billion (0.6 per cent of GDP) in the January-March quarter of 2023-24 as against a deficit of $8.7 billion (1 per cent of GDP) in the preceding October-December quarter of 2023-24 and $1.3 billion (0.2 per cent of GDP) the fourth quarter of 2022-23, reflecting an improvement in the country’s macroeconomic position.

The merchandise trade deficit at $50.9 billion in Q4 2023-24 was lower than $52.6 billion a year ago.

Services exports grew by 4.1 per cent on a year-on-year basis in Q4 2023-24 on the back of rising exports of software, travel and business services.

Net services receipt at $42.7 billion was higher than its level a year ago ($39.1 billion), which contributed to the surplus in the current account balance during Q4 2023-24.

Private transfer receipts, mainly representing remittances by Indians employed overseas, amounted to $32.0 billion, an increase of 11.9 per cent over their level a year ago.

The net outgo on the primary income account, primarily reflecting payments of investment income, increased to $14.8 billion from $12.6 billion a year ago.

In the financial account, net foreign direct investment flows were $2.0 billion in Q4 2023-24 as compared with $6.4 billion a year ago.

Foreign portfolio investment in the capital markets recorded a net inflow of $11.4 billion in Q4 2023-24 as against a net outflow of $1.7 billion during Q4 2022-23.

Net inflows under external commercial borrowings to India amounted to $2.6 billion in Q4 2023-24 as compared with $1.7 billion a year ago.

Non-resident deposits recorded a higher net inflow of $5.4 billion than $3.6 billion in Q4 2022-23.

There was an accretion of foreign exchange reserves to the tune of $30.8 billion in Q4 2023-24 as compared with an accretion of $5.6 billion a year ago.