India’s current account deficit was at 2.7% of the GDP in the year-ago period and 0.9% in the preceding quarter

India’s current account deficit (CAD) narrowed sharply to $1.4 billion or 0.2% of gross domestic product (GDP) in the December quarter, the Reserve Bank of India (RBI) said on March 12.

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The deficit was at 2.7% of the GDP in the year-ago period and 0.9% in the preceding quarter.

The sharp contraction was primarily due to a lower trade deficit at $34.6 billion, and a rise in net services receipts, the central bank said.

The CAD is a critical indicator of the macroeconomic health and represents the gap between the overall foreign exchange expended and received in the economy.

The data also comes on a day when the rupee depreciated to a 17-month low of 74.24 against the U.S. dollar.

For the first nine months of the fiscal year, the CAD has narrowed to 1% of the GDP.