India’s current account balance (CAB) recorded a surplus of $19.8 billion (3.9 per cent of GDP) in Q1 of 2020-21. This contrasts with a deficit of $ 15 billion (2.1 per cent of GDP) in April-June 2019 (Q1Fy20).
The surplus in April-June 2020 (Q1Fy21) comes on top of a surplus of $0.6 billion (0.1 per cent of GDP) in the preceding quarter (Q4 Fy20), said the Reserve Bank of India in a statement.
The surplus was due to a sharp contraction in the trade deficit to $10 billion, as the country’s merchandise imports declined sharply relative to exports on a year-on-year basis.
Net services receipts remained stable, primarily on the back of earnings from computer services. Private transfer receipts, comprising broadly remittances by Indians working overseas, amounted to $ 18.2 billion--a decline of 8.7 per cent from their level a year ago.
Net outgo from the primary income account, reflecting net overseas investment income payments, increased to $7.7 billion from $6.3 billion a year ago.
In the financial account, net foreign direct investment recorded outflow of $0.4 billion as against inflows of $ 14.0 billion in Q1 of 2019-20.
Net foreign portfolio investment was $0.6 billion as compared with $4.8 billion in Q1 of 2019-20 as net purchases in the equity market were offset by net sales in the debt segment.
With repayments exceeding fresh disbursals, external commercial borrowings to India recorded net outflow of $ 1.1 billion in Q1 of 2020-21 as against an inflow of $ 6.0 billion a year ago, it added.
Net inflow on account of non-resident deposits increased to $3 billion from $ 2.8 billion in Q1 of 2019-20. There was an accretion of $19.8 billion to the foreign exchange reserves (on a Balance of Payment basis) as against $14.0 billion in Q1 of 2019-20.
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