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Developments In India’s Balance Of Payments During The Second Quarter (Jul-Sep) Of 2017-18

Dec 13, 2017: Preliminary data on India’s balance of payments (BoP) for the second quarter (Q2), i.e., July-September 2017-18 are presented in Statements I (BPM6 format) and II (old format). (Source: RBI)

Key Features of India’s BoP in Q2 of 2017-18
  • India’s current account deficit (CAD) at US$ 7.2 billion (1.2 per cent of GDP) in Q2 of 2017-18 narrowed sharply from US$ 15.0 billion (2.5 per cent of GDP) in the preceding quarter, but was substantially higher than US$ 3.4 billion (0.6 per cent of GDP) in Q2 of 2016-17.
  • The widening of the CAD on a year-on-year (y-o-y) basis was primarily on account of a higher trade deficit (US$ 32.8 billion) brought about by a larger increase in merchandise imports relative to exports.
  • Net services receipts increased by 13.1 per cent on a y-o-y basis mainly on the back of a rise in net earnings from software services and travel receipts.
  • Private transfer receipts, mainly representing remittances by Indians employed overseas, amounted to US$ 17.4 billion, increasing by 14.7 per cent from their level a year ago.
  • In the financial account, net foreign direct investment at US$ 12.4 billion in Q2 of 2017-18 moderated from its level in Q2 of 2016-17.
  • Portfolio investment recorded net inflow of US$ 2.1 billion in Q2 of 2017-18, lower than US$ 6.1 billion in Q2 last year on account of net sale in the equity market.
  • Net receipts on account of non-resident deposits amounted to US$ 0.7 billion in Q2 of 2017-18, lower than US$ 2.1 billion a year ago.
  • In Q2 of 2017-18, there was an accretion of US$ 9.5 billion to the foreign exchange reserves (on BoP basis) as compared with US$ 8.5 billion in Q2 of 2016-17 and US$ 11.4 billion in the preceding quarter (Table 1).

BoP during April-September 2017 (H1 of 2017-18)
  • On a cumulative basis, the CAD increased to 1.8 per cent of GDP in H1 of 2017-18 from 0.4 per cent in H1 of 2016-17 on the back of widening of the trade deficit.
  • India’s trade deficit increased to US$ 74.8 billion in H1 of 2017-18 from US$ 49.4 billion in H1 of 2016-17.
  • Net invisible receipts were higher in H1 of 2017-18 mainly due to increase in net services earnings and private transfer receipts.
  • Net FDI inflows during H1 of 2017-18 moderated by 6.3 per cent over the level during the corresponding period of the previous year.
  • Portfolio investment recorded a net inflow of US$ 14.5 billion during H1 as compared with US$ 8.2 billion a year ago. 
  • In H1 of 2017-18, there was an accretion of US$ 20.9 billion to foreign exchange reserves.
India’s Balance of Payments during July 2017 to September 2018

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