India posts $6.5 bn current account surplus in 1st qtr

Mumbai: India's current account balance recorded a surplus of $6.5 billion or 0.9 per cent of the GDP in the quarter ended June, primarily due to contraction in the trade deficit and increase in services receipts, according to RBI data.

The country had registered a current account deficit of $8.1 billion or 1.0 per cent of the GDP in the fourth quarter (January-March) of 2020-21. It was a surplus of $19.1 billion or 3.7 per cent of the GDP in the year-ago period.

India had reported a current account surplus of 0.9 per cent of the GDP in the pandemic-hit 2020-21 as against a deficit of 0.9 per cent in 2019-20.

"India's current account balance recorded a surplus of $6.5 billion (0.9 per cent of GDP) in Q1:2021-22 as against a deficit of $8.1 billion (1.0 per cent of GDP) in Q4:2020-21 and a surplus of $19.1 billion (3.7 per cent of GDP) a year ago (Q1:2020-21)," RBI said on Thursday.

The surplus in the current account in the first quarter of 2021-22 was primarily on account of contraction in the trade deficit to $30.7 billion from $41.7 billion in the preceding quarter, and an increase in net services receipts, it added.

The CAD is the gap between the country's overall foreign receipts and payments.

As per RBI's 'Developments in India's Balance of Payments during the First Quarter (April-June) of 2021-22' report, net services receipts increased, both sequentially and on a year-on-year basis, on the back of robust performance of net exports of computer and business services.

Private transfer receipts, mainly representing remittances by Indians employed overseas, amounted to $20.9 billion, an increase of 14.8 per cent from their level a year ago.

Further, the net outgo from the primary income account, mainly reflecting net overseas investment income payments, decreased sequentially as well as on a year-on-year basis.

In the financial account, net foreign direct investment recorded an inflow of $11.9 billion as against an outflow of $0.5 billion in Q1:2020-21.

"Net foreign portfolio investment was $0.4 billion as compared with $0.6 billion in Q1:2020-21," RBI said.

The net inflow on account of non-resident deposits decreased to $2.5 billion from $3 billion in the first quarter of 2020-21. RBI also said there was an accretion of $31.9 billion to the foreign exchange reserves (on a BoP basis) as compared to $19.8 billion in April-June quarter of 2020-21.