The deficit was $4.2 billion in October through December, compared with $5.2 billion for the prior quarter, the Reserve Bank of India said in a statement in Mumbai today. The shortfall was equivalent to 0.9 percent of gross domestic product. The current account is the broadest measure of trade, tracking goods, services and investment income.
The government increased taxes on gold imports in the world’s biggest user of the metal three times last year to help pare a trade imbalance that has weighed on the rupee. The currency has gained about 11 percent since reaching an all-time low on Aug. 28, the world’s best performer in that time, as imports have fallen and growth remains subdued.
“It has come down for all the wrong reasons -- if the economy picks up, imports will rise and you’ll see the current-account deficit go up again.
The RBI report came after markets had closed. The rupee strengthened 0.2 percent to 61.76 per dollar in Mumbai. The S&P BSE Sensex (SENSEX) index rose 0.3 percent.
The October-December deficit is the least in data going back to 2010, which are calculated using the latest applicable International Monetary Fund guidelines.