India’s current account deficit (CAD) at US$ 3.4 billion (0.6 per cent of GDP) in Q4 of 2016-17 was higher than US$ 0.3 billion (0.1 per cent of GDP) in Q4 of 2015-16 but narrowed from US$ 8.0 billion (1.4 per cent of GDP) in the preceding quarter. For 2016-17 full year, the current account deficit (CAD) narrowed down to 0.7 per cent of GDP from 1.1 per cent of GDP in 2015-16. Quarterly data on India’s CAD are given in Table 1.

Table 1:  India's Current Account Balance

Quarters	CAD (US$ billion)	CAD as Per cent of GDP
2015-16 Q1	-6.1	-1.2
2015-16 Q2	-8.5	-1.7
2015-16 Q3	-7.1	-1.4
2015-16 Q4	-0.3	-0.1
2016-17 Q1	-0.4	-0.1
2016-17 Q2	-3.4	-0.6
2016-17 Q3	-8.0	-1.4
2016-17 Q4	-3.4	-0.6
Source: India's Balance of Payments Statistics

 The widening of the CAD in Q4 of 2016-17 on a year-on-year (y-o-y) basis was on account of a higher trade deficit (US$ 29.7 billion) due to a larger increase in merchandise imports relative to exports. High increase in imports of Petroleum, Oil & Lubricants (POL) and gold & silver imports led to the rise in imports in Q4 of 2016-17. Despite the widening in Q4 of 2016-17, the CAD is low and within manageable limits. The Government and the RBI closely monitor the emerging external economic situation including CAD and calibrate policies on an on-going basis.

This was stated by Shri Arjun Ram Meghwal, Minister of State for Finance in written reply to a question in Rajya Sabha today.

Current account deficit widens due to higher trade deficit driven by increased POL and gold imports. The CAD widened in Q4 of 2016-17 because the trade deficit increased as merchandise imports rose more than exports, with higher imports of Petroleum, Oil & Lubricants and gold and silver the principal contributors; the CAD nonetheless remained modest and within manageable limits while the Government and central bank continue to monitor the external situation and calibrate policy responses.