Current account deficit up by 2.9% in second quarter
Why in the discussion?
Recently, the Reserve Bank of India said that due to high trade deficit compared to 1.1% during the same period last year, the current account deficit (CAD) for the July-September quarter increased to 2.9% of GDP.
The deficit for the second quarter was $ 19.1 billion compared to $ 6.9 billion in the same period last year. The CAD for the April-June quarter was 2.4% or $ 15.9 billion of GDP.
The central bank said that the increase in CAD on an annual basis was mainly due to higher trade deficit of $ 50 billion this year compared to $ 32.5 billion last year.
According to experts, due to the sharp rise in oil prices, the current account deficit increased. But now prices have decreased by 31% from the top level. Despite the rupee depreciation against the dollar, there is an increase in exports. Hence, the entire year of the current account deficit is not expected to remain high this way.
Due to the increase in net income from software and financial services, the net receipts of net services increased by 10.2% mainly.
Private Transfer Receipts, mainly due to remittances by employed Indians abroad, was $ 20.9 billion, which is 19.8% more than the previous year.
According to the RBI, “In the financial account, net foreign direct investment decreased from $ 12.4 billion in the second quarter of 2017-18 to $ 7.9 billion in the second quarter of 2018-19.”
Portfolio investment recorded a net outflow of $ 1.6 billion due to net sales in debt and equity markets in the second quarter of 2018-19, compared to $ 2.1 billion in the second quarter of last year.
Net receipts due to non-resident deposits increased to $ 3.3 billion in the second quarter of 2018-19, compared to $ 0.7 billion in the previous year.
The Reserve Bank of India said that against the increase of $ 9.5 billion in the second quarter of 2017-18, foreign currency reserves (based on the balance of payments) in the second quarter of this year declined by $ 1.9 billion.
Stop the rupee fall
The central bank intervened in the currency market by selling dollars to stop the rapid decline in rupee. By October 2018, the rupee had weakened 15% against the dollar, but in November, the rupee depreciated due to the fall in oil prices.
Recent data released recently revealed that foreign currency reserves increased by $ 932.8 million to $ 393.718 billion in a week since November 30.
Overall, the country’s balance of payments was $ 1.9 billion in July-September quarter, while in the same period last year it had a surplus of $ 9.5 billion.
Compared to 1.8% of GDP in the first half of last year, the current account deficit has increased by 2.7% of GDP in the same period of 2018-19. Rating agency Fitch recently said that due to the increased current account gap, the rupee could fall to $ 75 per dollar.
Source: The Hindu
Global Hackathon On Artificial Intelligence on Artificial Intelligence
Strategy In partnership with Singapore based Artificial Intelligence (AI) startup, Perlin, launched the ‘AI 4 All Global Hackathon’.
Through this hackathon developers, students, start-ups and companies will be invited to develop important artificial intelligence applications for India.
In order to pursue the idea of ’AI 4 All’ in the artificial intelligence strategy, the Commission has organized this global hackathon.
The goal of this event is to suggest technological and innovative solutions to meet the various challenges in the development of artificial intelligence.