Preliminary data on India’s balance of payments (BoP) for the Fourth quarter (Q4) i.e., January-March of the financial year 2014-15 are presented in Statements I (BPM6 format) and II (old format).
Key Features of India’s BoP in Q4 2014-15
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On a quarter-over-quarter (q-o-q) basis, India’s current account deficit (CAD) narrowed sharply to US$ 1.3 billion (0.2 per cent of GDP) in Q4 of 2014-15 from US$ 8.3 billion (1.6 per cent of GDP) in Q3; on a year-on-year (y-o-y) basis, however, the CAD was a shade higher (US$ 1.2 billion or 0.2 per cent of GDP in Q4 of 2013-14).
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The merchandise trade deficit (US$ 31.7 billion during Q4 2014-15) contracted sharply on a q-o-q basis on account of a larger decline in merchandise imports (13.4 per cent) than in merchandise exports (10.4 per cent); however, in terms of y-o-y changes, the trade deficit in Q4 2014-15 widened marginally as exports registered a larger decline (15.4 per cent), than imports (10.4 per cent).
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The reduction in the CAD in Q4 2014-15 was primarily on account of lower trade deficit as net earnings through services and primary income (profit, dividend & interest) witnessed a decline in q-o-q terms albeit secondary income recorded a marginal increase of 0.4 per cent.
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Gross private transfer receipts, representing remittances by Indians employed overseas amounted to US$ 17.5, witnessing a marginal increase of 0.4 per cent on q-o-q basis and an increase of 1.2 per cent from the level a year ago.
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In the financial account, net inflows of foreign direct and portfolio investment were higher on a q-o-q basis, though net loans availed by banks witnessed an outflow US$ 3.5 billion mainly on account of increase in balances of foreign currency assets held abroad by banks.
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During Q4 of 2014-15, on a BoP basis, there was highest ever net accretion of US$ 30.1 billion to India’s foreign exchange reserves in a single quarter; it was more than double the accretion in the preceding quarter and almost four times of the reserves accrued in Q4 of 2013-14 (Table 1) signifying record increase in capital inflows and dip in current account deficit.
BoP during April-March 2015
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On a cumulative basis, the overall BoP during 2014-15 showed improvement over the preceding year. Lower CAD, on the back of contraction in trade deficit and marginal improvement in the net invisible earnings, along with a sizable increase in net financial flows enabled a large build-up of reserves.
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India’s trade deficit narrowed to US$ 144.2 billion in 2014-15 from US$ 147.6 billion in 2013-14. With modest increase in invisibles supported by some improvement in net services receipts, the CAD tracked the trade deficit and shrank to US$ 27.5 billion in 2014-15 (1.3 per cent of GDP) from US$ 32.4 billion (1.7 per cent of GDP) a year ago.
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Net inflows under the capital and financial account (excluding change in foreign exchange reserves) rose to US$ 89.5 billion during 2014-15 from US$ 48.7 billion in the previous year.
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There was an accretion to India’s foreign exchange reserves to the tune of US$ 61.4 billion in 2014-15 as compared with US$ 15.5 billion in 2013-14.
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At the end of March 2015, the level of foreign exchange reserves stood at US$ 341.6 billion.
Table 1: Major Items of India's Balance of Payments |
(US$ Billion) |
|
Jan-Mar 2015 (P) |
Jan-Mar 2014 (PR) |
Apr-Mar 2014-15 (P) |
Apr-Mar 2013-14 (PR) |
Credit |
Debit |
Net |
Credit |
Debit |
Net |
Credit |
Debit |
Net |
Credit |
Debit |
Net |
A. Current Account |
131.4 |
132.7 |
-1.3 |
144.4 |
145.6 |
-1.2 |
553.7 |
581.2 |
-27.5 |
551.4 |
583.7 |
-32.4 |
1. Goods |
70.8 |
102.5 |
-31.7 |
83.7 |
114.3 |
-30.7 |
316.7 |
460.9 |
-144.2 |
318.6 |
466.2 |
-147.6 |
Of which: |
|
|
|
|
|
|
|
|
|
|
|
|
POL |
7.7 |
21.8 |
-14.1 |
15.1 |
42.6 |
-27.4 |
55.2 |
138.3 |
-83.1 |
63.2 |
164.8 |
-101.6 |
2. Services |
39.8 |
20.4 |
19.4 |
40.6 |
21.0 |
19.6 |
155.4 |
79.8 |
75.7 |
151.5 |
78.5 |
73.0 |
3. Primary Income |
3.2 |
8.8 |
-5.6 |
2.8 |
9.2 |
-6.4 |
11.5 |
36.5 |
-25.0 |
11.4 |
34.4 |
-23.0 |
4. Secondary Income |
17.5 |
0.9 |
16.6 |
17.3 |
1.0 |
16.3 |
70.0 |
4.0 |
66.0 |
69.9 |
4.6 |
65.3 |
B. Capital Account and Financial Account |
149.2 |
148.9 |
0.3 |
127.1 |
125.1 |
2.0 |
548.4 |
520.3 |
28.1 |
523.2 |
490.0 |
33.2 |
Of which: |
|
|
|
|
|
|
|
|
|
|
|
|
Change in Reserve (Increase (-)/Decrease (+)) |
0.0 |
30.1 |
-30.1 |
0.0 |
7.1 |
-7.1 |
0.0 |
61.4 |
-61.4 |
0.0 |
15.5 |
-15.5 |
C. Errors & Omissions (-) (A+B) |
1.0 |
|
1.0 |
|
0.7 |
-0.7 |
|
0.6 |
-0.6 |
|
0.9 |
-0.9 |
P: Preliminary; PR: Partially Revised |
Note: Total of subcomponents may not tally with aggregate due to rounding off. |
Alpana Killawala Principal Chief General Manager
Press Release : 2014-2015/2616
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