India recorded a surplus of $19.8 billion (3.9% of GDP) in its current account balance in the first quarter of FY21, on top of a surplus of $0.6 billion (0.1% of GDP) in the preceding quarter, according to RBI data. A deficit of $15 billion (2.1% of GDP) was recorded a year earlier.
The surplus in the current account in the first quarter of 2020-21 was on account of a sharp contraction in trade deficit to $10 billion due to a steeper decline in merchandise imports relative to exports on a year-on-year basis, RBI said on Wednesday.
Aditi Nayar, principal economist, ICRA, said, “The current account surplus in Q1 was well above our expectations, as the fall in remittances was remarkably muted, despite the adverse economic conditions globally amid the ongoing pandemic.”
“With domestic and global lockdowns to fight COVID-19 [having] a differentiated impact on exports and imports, the merchandise trade deficit shrunk to just $10 billion in Q1, most of which was accounted for by the net oil balance,” she said.