India's current account deficit hits record high

It's now 6.7% of GDP.

According to DBS, Oct-Dec current account deficit(CAD) was worse than expected at fresh record high at 6.7% of GDP, significantly higher than 5.4% in the previous quarter and surpassing consensus. 

Here's more:

The breakdown revealed widely-known ills, though the scale surprised on most counts. The merchandise exports barely grew, while imports outpaced at 9.4% (YoY) and the trade deficit accordingly widened 18%. The modestincrease in service receipts was more than offset by slowdown in income inflows.

Financing worries however were addressed by a four-fold jump in portfolio inflows, accompanied by a notable increase in external commercial borrowings, while the crucial FDI inflows continued to contract.

The unfavourable mix of externalfinancing options, display a growing reliance on temperamental and debt-creating flows. This will keep the economy vulnerable to boutsto shift in risk sentiments and keep rupee under pressure to balance the weak basic balances.

While the data was dire,these are backward looking and numbers thus far in 4Q suggest some improvement in current account balances. That said, though off its peak,the CAD will still remain above 5.0% of GDP in 4Q on the hardened imports bill and struggling export sector.

Funding needs are alsolikely to fallshort as capital inflowsslowed in March, after a strong January and February. In the meantime, political developments are causing unease as possibility of early election makesthe rounds.

These could keep rupee and the financial markets under considerable pressure into the new fiscal yearthatstartstoday.

Another data setthat also attracted some (negative) attention wasthe fiscal deficit that jumped to INR5.1trn (97% of budgeted target) in April 2012-February 2013.

Significant restraint in government spending in March could enable the full-year deficit to meet the revised 5.2% of GDP estimate.