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« Sources of Variation in Foreign Exchange Reserves in India... | Professor Vijay Joshi, Emeritus Fellow, Merton College,... » |
Developments in India’s Balance of Payments during the Second Quarter (July-September) of 2017-18 |
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December, 14th 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).
Key Features of India’s BoP in Q2 of 2017-18
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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)
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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.
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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.
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Net invisible receipts were higher in H1 of 2017-18 mainly due to increase in net services earnings and private transfer receipts.
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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.
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Portfolio investment recorded a net inflow of US$ 14.5 billion during H1 as compared with US$ 8.2 billion a year ago.
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In H1 of 2017-18, there was an accretion of US$ 20.9 billion to foreign exchange reserves.
Table 1: Major Items of India's Balance of Payments |
(US$ Billion) |
|
July-September 2017 P |
July-September 2016 |
April-September 2017-18 P |
April-September 2016-17 |
Credit |
Debit |
Net |
Credit |
Debit |
Net |
Credit |
Debit |
Net |
Credit |
Debit |
Net |
A. Current Account |
145.6 |
152.8 |
-7.2 |
127.7 |
131.1 |
-3.4 |
285.5 |
307.8 |
-22.2 |
252.6 |
256.5 |
-3.8 |
1. Goods |
76.1 |
108.9 |
-32.8 |
67.4 |
93.0 |
-25.6 |
149.2 |
224.0 |
-74.8 |
134.0 |
183.5 |
-49.4 |
Of which: |
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POL |
9.4 |
23.7 |
-14.3 |
7.6 |
20.5 |
-12.9 |
16.9 |
46.5 |
-29.6 |
14.4 |
39.5 |
-25.1 |
2. Services |
47.4 |
29.0 |
18.4 |
40.9 |
24.6 |
16.3 |
93.3 |
56.6 |
36.7 |
80.3 |
48.2 |
32.0 |
3. Primary Income |
4.6 |
13.0 |
-8.5 |
4.1 |
12.2 |
-8.1 |
9.4 |
23.6 |
-14.3 |
7.8 |
22.2 |
-14.4 |
4. Secondary Income |
17.5 |
1.9 |
15.7 |
15.2 |
1.3 |
13.9 |
33.7 |
3.5 |
30.1 |
30.5 |
2.6 |
27.9 |
B. Capital Account and Financial Account |
146.5 |
139.7 |
6.9 |
138.9 |
134.6 |
4.3 |
302.2 |
281.0 |
21.2 |
268.1 |
263.6 |
4.5 |
Of which: |
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Change in Reserve (Increase (-)/Decrease (+)) |
0.0 |
9.5 |
-9.5 |
0.0 |
8.5 |
-8.5 |
0.0 |
20.9 |
-20.9 |
0.0 |
15.5 |
-15.5 |
C. Errors & Omissions (-) (A+B) |
0.4 |
|
0.4 |
|
0.9 |
-0.9 |
1.0 |
|
1.0 |
|
0.7 |
-0.7 |
P: Preliminary |
Note: Total of subcomponents may not tally with aggregate due to rounding off. |
Jose J. Kattoor Chief General Manager
Press Release: 2017-2018/1618
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