Mumbai– India’s current account deficit (CAD) dropped to $7.1 billion or 1.3 percent of GDP in the third quarter of 2015-16 on account of narrowing trade deficit, Reserve Bank of India (RBI) said on Monday.

“India’s current account deficit (CAD) at $7.1 billion or, 1.3 percent of GDP in Q3 (October-December) of 2015-16 was lower than $7.7 billion or, 1.5 percent of GDP in Q3 of 2014-15,” an RBI release said.

“The contraction in CAD was primarily on account of a lower trade deficit ($34 billion) than in Q3 of last year ($38.6 billion).”

The RBI also said foreign exchange reserves (on a balance of payment basis) increased by $4.1 billion in the October-December quarter of the current fiscal.

On a cumulative basis, the CAD contracted to 1.4 percent of GDP in the first nine months of the fiscal from 1.7 percent in the April-December period of 2014-15, on the back of a fall in the trade deficit.

During April-December, there was an accretion of $14.6 billion to foreign exchange reserves (on a balance of payment basis), as compared to $31.3 billion in the corresponding period of 2014-15.

Private transfer receipts, mainly representing remittances by Indians abroad, amounted to $15.8 billion, a decline from their level in the preceding quarter as well as from a year ago.

Net foreign direct investment (FDI) picked up in third quarter and stood at $10.8 billion, after earlier moderating in the second quarter.

“Non-resident Indian deposits moderated significantly in Q3 of 2015-16 over their level in Q3 last year as well as the preceding quarter,” RBI said.