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Developments in Indias Balance of Payments during the First Quarter (April-June) of 2016-17
September, 23rd 2016

Preliminary data on India’s balance of payments (BoP) for the first quarter (Q1) i.e., April-June, 2016-17 are presented in Statements I (BPM6 format) and II (old format).

Key Features

  • The current account deficit (CAD) narrowed to US$ 0.3 billion (0.1 per cent of GDP) in Q1 of 2016-17, significantly lower than US$ 6.1 billion (1.2 per cent of GDP) in Q1 of 2015-16 (Table 1).

  • The contraction in the CAD was primarily on account of a lower trade deficit (US$ 23.8 billion) than in Q1 of last year (US$ 34.2 billion) and in the preceding quarter (US$ 24.8 billion).

  • On a BoP basis, merchandise imports declined sharply (by 11.5 per cent) vis-à-vis merchandise exports (which declined by 2.1 per cent), leading to a lower trade deficit in Q1 of 2016-17.

  • Net services receipts declined on a y-o-y basis, largely due to a fall in net earnings on account of travel, financial services and other business services.

  • Net payment on account of primary income (dividend, interest and profit) increased marginally in Q1 of 2016-17 from its level a year ago.

  • Private transfer receipts, mainly representing remittances by Indians employed overseas, amounted to US$ 15.2 billion, declining from their level in the preceding quarter as well as from a year ago.

  • Net foreign direct investment moderated to US$ 4.1 billion in Q1 of 2016-17 from US$ 10.0 billion in Q1 of 2015-16 and US$ 8.8 billion in the preceding quarter i.e., Q4 of 2015-16.

  • On the other hand, portfolio investment, recorded a net inflow of US$ 2.1 billion in Q1 of 2016-17 as against a marginal outflow in the corresponding period of last year and an outflow of US$ 1.5 billion in the preceding quarter, primarily reflecting net inflow in the equity component.

  • Accretion to non-resident Indian (NRI) deposits at US$ 1.4 billion moderated in Q1 of 2016-17 from their level in Q1 last year as well as in the preceding quarter.

  • Higher repayments under external commercial borrowings led to a net outflow under loans to India in Q1 of 2016-17 as against net borrowings in the same period last year.

  • Foreign exchange reserves (on a BoP basis) increased by US$ 7.0 billion in Q1 of 2016-17 as compared with an accretion of US$ 11.4 billion in Q1 of 2015-16 and US$ 3.3 billion in the preceding quarter.

Table 1: Major Items of India's Balance of Payments
(US$ Billion)
  Apr-Jun 2016 (P) Apr-Jun 2015 (PR)
Credit Debit Net Credit Debit Net
A. Current Account 125.2 125.5 -0.3 126.9 133.0 -6.1
1. Goods 66.6 90.5 -23.8 68.0 102.2 -34.2
   Of which:            
         POL 7.0 19.0 -12.0 8.3 24.7 -16.4
2. Services 39.5 23.8 15.8 38.3 20.5 17.8
3. Primary Income 3.8 10.0 -6.2 3.3 9.2 -5.9
4. Secondary Income 15.3 1.3 14.0 17.3 1.1 16.2
B. Capital Account and Financial Account 129.2 129.0 0.1 141.1 133.9 7.2
  Of which:            
Change in Reserve (Increase (-)/Decrease (+)) 0.0 7.0 -7.0 0.0 11.4 -11.4
C. Errors & Omissions (-) (A+B) 0.2 0.0 0.2 0.0 1.1 -1.1
P: Preliminary; PR: Partially Revised
Note: Total of subcomponents may not tally with aggregate due to rounding off.

Alpana Killawala
Principal Adviser

Press Release : 2016-2017/727

 
 
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