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Developments in India’s Balance of Payments during the Third Quarter (October-December) of 2019-20 |
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| March, 13th 2020 |
Preliminary data on India’s balance of payments (BoP) for the third quarter (Q3), i.e., October-December 2019-20, are presented in Statements I (BPM6 format) and II (old format).
Key Features of India’s BoP in Q3 of 2019-20
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India’s current account deficit (CAD) narrowed sharply to US$ 1.4 billion (0.2 per cent of GDP) in Q3 of 2019-20 from US$ 17.7 billion (2.7 per cent of GDP) in Q3 of 2018-19 and US$ 6.5 billion (0.9 per cent of GDP) in the preceding quarter, i.e., Q2 of 2019-20.
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The contraction in the CAD was primarily on account of a lower trade deficit at US$ 34.6 billion and a rise in net services receipts at US$ 21.9 billion as compared with the corresponding period of last year.
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Net services receipts increased on the back of a rise in net earnings from computer, travel and financial services.
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Private transfer receipts, mainly representing remittances by Indians employed overseas, increased to US$ 20.6 billion, up by 9.0 per cent from their level a year ago.
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In the financial account, net foreign direct investment at US$ 10.0 billion was higher than US$ 7.3 billion in Q3 of 2018-19.
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Foreign portfolio investment recorded net inflow of US$ 7.8 billion – as against an outflow of US$ 2.1 billion in Q3 of 2018-19 – on account of net purchases in both the debt and equity market.
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Net inflow on account of external commercial borrowings to India was US$ 3.2 billion as compared with US$ 2.0 billion in Q3 of 2018-19.
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There was an accretion of US$ 21.6 billion to the foreign exchange reserves (on BoP basis) as against a depletion of US$ 4.3 billion in Q3 of 2018-19 (Table 1).
BoP during April-December 2019-20
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The CAD narrowed to 1.0 per cent of GDP in April-December of 2019-20 from 2.6 per cent in April-December of 2018-19 on the back of a reduction in the trade deficit which shrank to US$ 118.9 billion in April-December 2019-20 from US$ 145.1 billion in April-December of 2018-19.
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Net invisible receipts were higher in April-December of 2019-20, mainly due to increase in net services earnings and private transfer receipts.
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Net FDI inflows at US$ 32.1 billion in April-December of 2019-20 were higher than US$ 24.3 billion in April-December of 2018-19.
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Portfolio investment recorded a net inflow of US$ 15.1 billion in April-December of 2019-20 as against an outflow of US$ 11.9 billion a year ago.
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In April-December 2019-20, there was an accretion of US$ 40.7 billion of the foreign exchange reserves (on a BoP basis).
| Table 1: Major Items of India's Balance of Payments |
| (US$ Billion) |
| |
October-December 2019 P |
October-December 2018 |
April-December 2019-20 P |
April-December 2018-19 |
| Credit |
Debit |
Net |
Credit |
Debit |
Net |
Credit |
Debit |
Net |
Credit |
Debit |
Net |
| A. Current Account |
162.6 |
164.0 |
-1.4 |
162.8 |
180.5 |
-17.7 |
484.5 |
506.8 |
-22.3 |
478.6 |
531.1 |
-52.6 |
| 1. Goods |
81.2 |
115.9 |
-34.6 |
83.1 |
132.4 |
-49.3 |
244.0 |
362.9 |
-118.9 |
249.9 |
394.9 |
-145.1 |
| Of which: |
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| POL |
11.5 |
31.4 |
-19.9 |
13.0 |
38.4 |
-25.4 |
32.8 |
96.5 |
-63.7 |
36.6 |
108.5 |
-71.9 |
| 2. Services |
55.2 |
33.3 |
21.9 |
55.1 |
33.4 |
21.7 |
159.7 |
97.3 |
62.4 |
153.4 |
92.8 |
60.6 |
| 3. Primary Income |
5.6 |
12.9 |
-7.4 |
5.7 |
13.2 |
-7.6 |
18.2 |
40.7 |
-22.5 |
16.6 |
38.6 |
-21.9 |
| 4. Secondary Income |
20.6 |
1.9 |
18.7 |
19.0 |
1.5 |
17.4 |
62.6 |
5.9 |
56.7 |
58.7 |
4.8 |
53.8 |
| B. Capital Account and Financial Account |
151.7 |
150.9 |
0.7 |
127.0 |
109.0 |
18.1 |
430.5 |
408.4 |
22.1 |
401.0 |
348.4 |
52.6 |
| Of which: |
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| Change in Reserves (Increase (-)/Decrease (+)) |
0.0 |
21.6 |
-21.6 |
4.3 |
0.0 |
4.3 |
0.0 |
40.7 |
-40.7 |
17.5 |
0.0 |
17.5 |
| C. Errors & Omissions (-) (A+B) |
0.7 |
|
0.7 |
|
0.3 |
-0.3 |
0.2 |
|
0.2 |
|
0.1 |
-0.1 |
| P: Preliminary |
| Note: Total of subcomponents may not tally with aggregate due to rounding off. |
(Yogesh Dayal)
Chief General Manager
Press Release: 2019-2020/2050
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