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India’s Balance of Payments(BOP) During 4th Quarter (Jan-Mar) Of 2016-17: Key Highlights

RBI, in its press release # 2016-2017/3388 dated Jun 15, 2017, has released the preliminary data on India’s balance of payments (BoP) for the fourth quarter (Q4) i.e., January-March 2016-17 are presented in Statements I (BPM6 format) and II (old format).

Key Features of India’s BoP in Q4 of 2016-17
  • India’s current account deficit (CAD) at US$ 3.4 billion (0.6 per cent of GDP) in Q4 of 2016-17 was higher than US$ 0.3 billion (0.1 per cent of GDP) in Q4 of 2015-16 but narrowed from US$ 8.0 billion (1.4 per cent of GDP) in the preceding quarter.
  • The widening of the CAD on a year-on-year (y-o-y) basis was primarily on account of a higher trade deficit (US$ 29.7 billion) brought about by a larger increase in merchandise imports relative to exports.
  • Net services receipts increased on a y-o-y basis on the back of a rise in net earnings from travel, transport, construction and other business services.
  • Private transfer receipts, mainly representing remittances by Indians employed overseas, at US$ 15.7 billion remained almost at the same level as in the preceding year.
  • In the financial account, net foreign direct investment at US$ 5.0 billion in Q4 of 2016-17 moderated from its level a year ago.
  • Net portfolio investment, however, recorded substantial inflow of US$ 10.8 billion in Q4 of 2016-17 in both equity and debt segment, as against net outflow of US$ 1.5 billion in Q4 last year.
  • Net receipts on account of non-resident deposits amounted to US$ 2.7 billion in Q4 of 2016-17, lower than US$ 4.4 billion a year ago.
  • In Q4 of 2016-17, there was an accretion of foreign exchange reserves (on BoP basis) to the tune of US$ 7.3 billion as compared with an increase of US$ 3.3 billion in Q4 of last year (Table 1).

BoP during 2016-17
  • On a cumulative basis, the CAD narrowed to 0.7 per cent of GDP in 2016-17 from 1.1 per cent in 2015-16 on the back of the contraction in the trade deficit.
  • India’s trade deficit narrowed to US$ 112.4 billion in 2016-17 from US$ 130.1 billion in 2015-16.
  • Net invisible receipts were lower, mainly due to moderation in both software exports and net private transfer receipts, and higher outgo on account of primary income (profit, interest and dividends).
  • Gross FDI inflows to India in 2016-17 at US$ 60.2 billion increased significantly from US$ 55.6 billion in 2015-16.
  • Net FDI inflows (i.e., net of outward FDI) in 2016-17 at US$ 35.6 billion moderated marginally from US$ 36.0 billion in 2015-16.
  • Portfolio investment recorded a net inflow of US$ 7.6 billion in 2016-17 as against an outflow of US$ 4.5 billion a year ago.
  • In 2016-17, there was an accretion of US$ 21.6 billion to the foreign exchange reserves as compared with US$ 17.9 billion in 2015-16.

Major items of India's Balance of Payments

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