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| « Developments in India’s Balance of Payments during the... | RBI-Sources of Variation in Foreign Exchange Reserves in... » |
Developments in India’s Balance of Payments during the First Quarter (April-June) of 2016-17 |
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| September, 22nd 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
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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).
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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).
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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.
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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.
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Net payment on account of primary income (dividend, interest and profit) increased marginally in Q1 of 2016-17 from its level a year ago.
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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.
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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.
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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.
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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.
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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.
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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: |
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| 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: |
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| 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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