The deficit stood at just $0.4 billion or 0.1% of the GDP in the corresponding quarter of last fiscal and $3.4 billion or 0.6% of the GDP in Q4FY17.

India’s current account deficit (CAD) rose to three-year high of $14.3 billion or 2.4% of GDP in the first quarter of the current financial year. The deficit stood at just $0.4 billion or 0.1% of the GDP in the corresponding quarter of last fiscal and $3.4 billion or 0.6% of the GDP in Q4FY17.

Despite the widening of CAD, the first quarter saw an accretion of $11.4 billion to the foreign exchange reserves (on a balance of payment basis) as compared with $7 billion in the same period last year, thanks to a big capital account surplus of $25.4 billion. Both FDI and portfolio inflows were much higher than in the year-ago quarter in Q1FY18 on a net basis.

The widening of the CAD on a year-on-year basis was primarily on account of a higher trade deficit ($ 41.2 billion) brought about by a larger increase in merchandise imports relative to exports, the RBI said in a release.

The CAD for the first quarter of this fiscal, though much higher than in recent quarters — it was the highest since Q1FY14 — came in a tad lower than market expectations. Nomura had pointed out in a report that it expected the CAD to widen to a four-year high of 3% of GDP.

Net services receipts increased by 15.7% on a y-o-y basis mainly on the back of a rise in net earnings from travel, construction and other business services. Private transfer receipts, mainly representing remittances by Indians employed overseas, at $16.1 billion increased by 5.3% over the corresponding quarter of previous year.

Net portfolio investment recorded substantial inflow of $12.5 billion in the first quarter of FY18, primarily in the debt segment, as compared with $ 2.1 billion in the same period last year. Net FDI in the first quarter of this fiscal stood at $7.2 billion against $3.9 billion in the year-ago quarter.

Net receipts on account of non-resident deposits amounted to $1.2 billion in the first quarter — lower than $1.4 billion a year ago. “High monthly trade deficits (driven by gold imports), and strong reserve accretion during the quarter (Q1FY18) had respectively flagged the high CAD and BoP,” Credit Suisse said.

It added that low July/Aug trade deficits point to a ~$35bn trade deficit in 2Q (~$9bn CAD), offsetting the lower FPI inflows.