India's current account deficit narrows to $5.2 billion in August as capital account surplus hits $50.6 billion

In August, India's current account deficit narrowed significantly to $5.2 billion, down from $6.1 billion the previous year. Meanwhile, the country recorded a substantial $50.6 billion surplus in its capital account. This resulted in an overall balance of payments surplus of $45.4 billion, a stark contrast to the $5.6 billion deficit in the same month a year ago.

A crucial factor behind this improvement was the dedicated dollar mobilization program initiated by the central bank. This initiative led to an accumulation of non-resident deposits amounting to $83 billion in August, contributing to the impressive capital account surplus.

However, the gain was slightly tempered by a net outflow of $22.4 billion under the external commercial borrowing category. Despite this, the current account deficit managed to shrink due to a smaller deficit in merchandise trade and a larger surplus in services trade, as reported by the Reserve Bank of India (RBI).

For the first five months of the financial year, the balance of payments surplus stood at $58 billion, compared to a $0.8 billion deficit in the corresponding period a year ago. However, the current account deficit widened to $18.3 billion for the five-month period, up from $12.8 billion in the same period the previous year. The capital account surplus expanded to $76.3 billion, up from $12 billion in the comparable period last year.