India recorded a current account surplus of $0.6 billion, or 0.1 per cent of GDP, for the January-March period as against a deficit of $4.6 billion (0.7 per cent of GDP) in the year-ago period, the Reserve Bank of India (RBI) said on Tuesday. According to news agency Reuters, this is the first quarterly surplus in 13 years.
For the full fiscal year 2019-20, the current account deficit narrowed to 0.9 per cent of the GDP compared to 2.1 per cent in financial year 2018-19, the central bank said. Lower trade deficit was one of the prime reasons for the improvement in the current account balances both for the March quarter as well as for the whole fiscal year.
Current account balances, which represents the net of the country’s export and imports of goods and services and also payments made to foreign investors or inflows from them.
“On paper this looks healthy but it primarily reflects India’s economic slowdown, which has significantly reduced the non oil, non precious metals imports during FY20,” Reuters quoted Rupa Rege Nitsure, chief economist at L&T Financial Holdings, as saying.
RBI said the surplus in the current account in the March quarter was primarily on account of a lower trade deficit at $35 billion and a sharp rise in net invisible receipts at $35.6 billion as compared with the corresponding period of last year.
The net services receipts increased to $22 billion in March quarter as against the year-ago’s $21.3 billion on the back of a rise in net earnings from computer and travel services on a year-on-year basis, the RBI said.
Private transfer receipts, mainly representing remittances by Indians employed overseas, increased 14.8 per cent to $20.6 billion for the reporting quarter, the RBI said.
The net outgo from the primary income account, which primarily reflects the net overseas investment income payments, decreased to $4.8 billion from $6.9 billion a year ago, the central bank said.
The net foreign direct investment nearly doubled to $12 billion for the March quarter as against the $6.4 billion in the year-ago period, while foreign portfolio investments (FPIs) declined by $13.7 billion during the three month period as against an increase of $9.4 billion in the year-ago period.