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Preliminary data on India’s balance of payments (BoP) for the second quarter (Q2) i.e., July-September 2015-16 are presented in Statements I (BPM6 format) and II (old format).

Key Features of India’s BoP in Q2 of 2015-16

• India’s current account deficit (CAD) at US$ 8.2 billion (1.6 per cent of GDP) in Q2 of 2015-16 was lower than US$ 10.9 billion (2.2 per cent of GDP) in Q2 of 2014-15 but increased from US$ 6.1 billion (1.2 per cent of GDP) in the preceding quarter (Table 1).

• The contraction in CAD was primarily on account of lower trade deficit (US$ 37.4 billion) as compared with US$ 39.7 billion in Q2 of last year though it was higher than the level in the preceding quarter (US$ 34.2 billion).

• Although net services receipts moderated marginally on a y-o-y basis largely due to fall in export receipts in transport, insurance and pension services, there has been some improvement over the preceding quarter.

• Private transfer receipts, mainly representing remittances by Indians employed overseas, amounted to US$ 16.5 billion, a marginal decline from their level in the preceding as well as the corresponding quarter.

• After a sharp pick up in Q1, net foreign direct investment moderated in Q2 of 2015-16.

• There has been net outflow of portfolio investment to the tune of US$ 6.5 billion as against net inflow of US$ 9.8 billion in Q2 of last year; outflow was more evident in the equity segment.

• Non-resident Indian (NRI) deposits, however, increased by 4.0 per cent in Q2 of 2015-16 over the level in Q2 of last year.

• Foreign exchange reserves (on BoP basis) decreased by US$ 0.9 billion in Q2 of 2015-16.

BoP during April-September 2015 (H1 of 2015-16)

• On a cumulative basis, the CAD narrowed to 1.4 per cent of GDP in H1 of 2015-16 from 1.8 per cent in H1 of 2014-15 on the back of contraction in the trade deficit and a marginal improvement in net invisibles.

• India’s trade deficit narrowed to US$ 71.6 billion in H1 of 2015-16 from US$ 74.7 billion in H1 of 2014-15.

• Net invisible receipts were marginally higher with the moderation in net services earnings and private transfer receipts being offset by a smaller net outflow of primary income (profit interest and dividends).

• Net FDI inflows during H1 of 2015-16 rose by more than 10 per cent over the level during the corresponding period of the previous year.

• Portfolio investment, however, recorded a net outflow US$ 9.1 billion during H1 as against a net inflow of US$ 22.2 billion last year.

In H1 of 2015-16, there was an accretion of US$ 10.6 billion to foreign exchange reserves (on a BoP basis) as compared with US$ 18.1 billion in H1 of 2014-15.

Alpana Killawala
Principal Chief General Manager

Press Release : 2015-2016/1478