MUMBAI - India's current account deficit narrowed in the three months from January to March, mainly on the back of a moderation in the trade gap and a lower net outflow of primary income, the Reserve Bank of India said on Wednesday.

The current account deficit stood at $13.4 billion or 1.5% of GDP in the fourth quarter of fiscal year 2021/22, compared with $22.2 billion or 2.6% of GDP in the preceding October-December quarter.

The deficit had stood at $8.1 billion in the same quarter a year ago, the release showed.

"The current account balance recorded a deficit of 1.2% of GDP in 2021-22 as against a surplus of 0.9% in 2020-21 as the trade deficit widened to $189.5 billion from $102.2 billion a year ago," the RBI said in the release.

Net invisible receipts were higher in 2021-22 due to increase in net exports of services and net private transfer receipts, even though net income outflow was higher than a year ago, it added.

Net foreign direct investment inflows stood at $38.6 billion in FY22, lower than $44 billion in FY21.

"The current account deficit printed well below our forecast of $16 billion in Q4 FY2022 benefiting from higher than expected secondary income," said Aditi Nayar, chief economist at rating agency ICRA.

"On a year-on-year basis, although gold imports halved, and the services trade surplus rose, this improvement was dwarfed by the widening of the merchandise trade deficit led by imports of commodity inputs such as crude oil, coal and fertilisers, as well as electronic goods," Nayar said.

The merchandise trade deficit narrowed to $54.5 billion in the March quarter compared with a deficit of $60.4 billion in the previous quarter. The deficit in the same quarter a year ago however had stood at $41.7 billion.

Private transfer receipts, mainly representing remittances by Indians employed overseas, increased to $23.7 billion in Q4 FY22, up by 13.4% from their level a year ago.

The country's balance of payments stood at a deficit of $16 billion compared to small surplus of $0.5 billion in the preceding quarter and a surplus of $3.4 billion in the same quarter a year earlier.

However, on a full-year basis the balance of payments recorded a surplus of $47.5 billion.

(Reporting by Swati Bhat; Editing by Mark Heinrich and Hugh Lawson)