The Hindu : Current account deficit at $1.2 b in Q1

Online edition of India's National Newspaper
Wednesday, Oct 01, 2003

Business

Business

Current account deficit at $1.2 b in Q1

By Our Special Correspondent

MUMBAI SEPT. 30. The Reserve Bank of India today stated that the overall balance of payements (BoP) position of India comprising current account deficit ($1.2 billion), capital account surplus ($6.1 billion) and errors and omissions ($3 million) showed a higher net inflow of $5.2 billion than an inflow of $1.7 billion in April-June 2002.

The net accretion to foreign exchange reserves excluding valuation change amounted to $5.2 billion as compared with $1.7 billion during April-June 2002. Including valuation change ($1.5 billion) net accretion to foreign exchange reserves stood at $6.7 billion.

During April-June 2003, on payments basis, merchandise exports amounted to $13.5 billion as against $12.1 billion in the corresponding period of the previous year thus, registering a growth of 12.2 per cent. Imports during the same period stood at $19.4 billion as compared with $14.8 billion during April-June 2002. At this level, imports showed a growth of 30.8 per cent.

The trade deficit on payments basis increased to $5.9 billion in the quarter under review from $2.8 billion during April-June 2002, mainly on account of higher imports. Private transfers (net), comprising mainly remittances and local withdrawal from NRI deposits, were higher at $4.2 billion than $3.5 billion in April-June 2002.

The net position of the invisibles account registered a surplus of $4.7 billion as against a surplus of $3.2 billion during April-June 2002. The current account during April-June 2003, with a trade deficit of $5.9 billion and a net invisible surplus of $4.7 billion, registered a deficit of $1.2 billion. This shift in the current account position was witnessed after maintaining surplus position for six consecutive quarters since the third quarter of fiscal 2001-02. During this period, quarterly current account surplus ranged between $400 million and $1.9 billion.

Net inflows under foreign investment comprising foreign direct investment (FDI) and portfolio investment amounted to $2.8 billion during April-June 2003 as against $1.1 billion during the corresponding period of the previous year. This was mainly on account of higher inflows under portfolio investment. FDI inflows to India (net) under the extended coverage (including equity capital, reinvested earnings and other capital of FDI companies) at $700 million were lower than that of $1.3 billion in April-June 2002. This was mainly on account of deceleration in inflow through the SIA/FIPB route on the projects approved by the Government.

Inflows under portfolio investment (both equity and debt) to India amounted to $2 billion as compared with a net outflow of $300 million in April-June 2002 in view of the expectation of good performance of the Indian economy.

Net inflows under external loans (comprising external assistance, external commercial borrowings and short-term loans) stood at $1.2 billion as against an outflow of $500 million in the corresponding period of the previous year.

Net inflows under banking capital comprising foreign assets and liabilities (including NRI deposits) of commercial banks and balances of foreign central banks and international institutions stood at $1.9 billion as compared with $700 million in April-June 2002.

The net position of the foreign assets and liabilities excluding NRI deposits, showed a net inflow of $100 million as against an outflow of $200 million in the corresponding period of the previous year.

Other capital (net) comprising difference between the banking channel and customs data relating to exports, fund held abroad raised through external commercial borrowing (ECB), India's subscription to international institutions and quota payments to IMF amounted to $500 million as against $900 million in the same period of 2002-03. The major portion under other capital was accounted by the difference between banking channel and customs data relating to exports ($800 million), which was partially offset by decline in funds held abroad (minus $400 million).

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