India current account deficit widens sharply on higher imports

Indian laborers carry large baskets holding vegetables to a wholesale market in Kolkata. A rise in imports has widened the country’s current account deficit. (Reuters)
Updated 17 March 2018
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India current account deficit widens sharply on higher imports

MUMBAI: India’s October-December current account deficit widened sharply from a year earlier, driven by higher imports, data from the Reserve Bank of India showed on Friday.

The deficit widened to 2 percent of gross domestic product, or $13.5 billion, up from 1.4 percent, or $8 billion, in the corresponding period a year ago.

“The widening of the deficit on a year-on-year basis was primarily on account of a higher trade deficit brought about by a larger increase in merchandise imports relative to exports,” the RBI said in a statement on India’s balance of payments.

India’s trade deficit widened to $44.1 billion from $33.3 billion a year ago while the balance of payments posted a surplus of $9.4 billion in the October-December period, compared with a deficit of $1.2 billion a year ago, helped by a stronger capital account.

The capital and financial account surplus rose to $12.6 billion in the December quarter from $7.3 billion a year ago, bolstered by robust foreign portfolio inflows worth $5.3 billion during this period, the RBI said.

“The current account deficit is expected to widen in the next fiscal year 2018/19 on firm oil prices,” said A Prasanna, chief economist at ICICI Securities Primary Dealership in the financial capital of Mumbai.

“The current account deficit alone is not a big risk, but a combination of higher current account and fiscal deficit and inflation is expected to weigh on the rupee,” he added.

Prasanna expects India’s current account deficit to stand at 2 percent of GDP in the fiscal year ending in March 2018 and then widen to 2.3 percent in the next fiscal year.

Despite the widening of the current account gap, the rupee currency outperformed most of its Asian peers in 2017, boosted by strong dollar inflows, but has become one of the region’s weakest, falling by 1.65 percent in 2018, as inflows slowed.


Iran falls to sixth biggest oil supplier to India as sanctions bite

Updated 14 December 2018
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Iran falls to sixth biggest oil supplier to India as sanctions bite

  • Tehran dropped two places to become only the sixth biggest supplier after New Delhi cut purchases due to the impact of US sanctions
  • The UAE, which was the sixth biggest oil seller to India in October, became the third-top seller to India in November

NEW DELHI: India’s monthly oil imports from Iran plunged to their lowest in a year in November with Tehran dropping two places to become only the sixth biggest supplier after New Delhi cut purchases due to the impact of US sanctions, according to ship tracking data and industry sources.
Last month, the US introduced tough sanctions aimed at crippling Iran’s oil revenue-dependent economy. Washington did, though, give a six-month waiver from sanctions to eight nations, including India, and allowed them to import some Iranian oil.
India is restricted to buying 1.25 million tons per month, or about 300,000 barrels per day (bpd).
In November, India imported about 276,000 bpd of Iranian oil, a decline of about 41 percent from October and about 4 percent more than the year-ago month, ship tracking data obtained from shipping and trade sources showed.
After abandoning the 2015 Iran nuclear deal, US President Donald Trump is trying to force Tehran to quash not only its nuclear ambitions and its ballistic missile program but its support for militant proxies in Syria, Yemen, Lebanon and other parts of the Middle East.
India’s imports from Iran in November, included some parcels that were loaded in October. In November, Iraq and Saudi Arabia continued to be the top-two oil sellers to India.
The UAE, which was the sixth biggest oil seller to India in October, became the third-top seller to India in November, knocking down Venezuela to fourth position.