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Date : Dec 30, 2020
Developments in India’s Balance of Payments during the Second Quarter (July-September) of 2020-21

Preliminary data on India’s balance of payments (BoP) for the second quarter (Q2), i.e., July-September 2020-21, are presented in Statements I (BPM6 format) and II (old format).

Key Features of India’s BoP in Q2 of 2020-21

  • India’s current account surplus moderated to US$ 15.5 billion (2.4 per cent of GDP) in Q2 of 2020-21 from US$ 19.2 billion (3.8 per cent of GDP) in Q1 of 2020-21; a deficit of US$ 7.6 billion (1.1 per cent of GDP) was recorded a year ago [i.e. Q2 of 2019-20].

  • The narrowing of the current account surplus in Q2 of 2020-21 was on account of a rise in the merchandise trade deficit to US$ 14.8 billion from US$ 10.8 billion in the preceding quarter.

  • Net services receipts increased both sequentially and on a year-on-year basis, primarily on the back of higher net earnings from computer services.

  • Private transfer receipts, mainly representing remittances by Indians employed overseas, declined on a y-o-y basis but improved sequentially by 12 per cent to US$ 20.4 billion in Q2 2020-21.

  • Net outgo from the primary income account, primarily reflecting net overseas investment income payments, increased to US$ 9.3 billion from US$ 8.8 billion a year ago.

  • In the financial account, net foreign direct investment recorded robust inflow of US$ 24.6 billion as compared with US$ 7.3 billion in Q2 of 2019-20.

  • Net foreign portfolio investment was US$ 7.0 billion as compared with US$ 2.5 billion in Q2 of 2019-20, largely reflecting net purchases in the equity market.

  • With repayments exceeding fresh disbursals, external commercial borrowings to India recorded net outflow of US$ 4.1 billion in Q2 of 2020-21 as against an inflow of US$ 3.1 billion a year ago.

  • Net accretions to non-resident deposits moderated to US$ 1.9 billion from US$ 2.3 billion in Q2 of 2019-20.

  • There was an accretion of US$ 31.6 billion to the foreign exchange reserves (on a BoP basis) as compared with that of US$ 5.1 billion in Q2 of 2019-20 (Table 1).

BoP during April-September 2020-21 (H1 of 2020-21)

  • India recorded a current account surplus of 3.1 per cent of GDP in H1of 2020-21 as against a deficit of 1.6 per cent in H1 of 2019-20 on the back of a sharp contraction in the trade deficit.

  • Net invisible receipts were lower in H1 of 2020-21, mainly due to decline in net private transfer receipts.

  • Net FDI inflows at US$ 23.8 billion in H1of 2020-21 were higher than US$ 21.3 billion in H1of 2019-20.

  • Portfolio investment recorded a net inflow of US$ 7.6 billion in H1of 2020-21, almost at the same level as a year ago.

  • In H1 of 2020-21, there was an accretion of US$ 51.4 billion to the foreign exchange reserves (on a BoP basis).

Table 1: Major Items of India's Balance of Payments
(US$ billion)
  July-September 2020 P July-September 2019 April-September 2020-21 P April-September 2019-20
  Credit Debit Net Credit Debit Net Credit Debit Net Credit Debit Net
A. Current Account 151.0 135.4 15.5 161.6 169.1 -7.6 273.4 238.7 34.8 322.2 344.8 -22.5
1. Goods 75.6 90.4 -14.8 80.0 119.6 -39.6 127.9 153.5 -25.6 162.7 249.1 -86.4
  Of which:                        
        POL 7.3 18.8 -11.5 10.1 29.8 -19.7 12.1 32.0 -19.9 21.2 65.2 -44.0
2. Services 49.9 28.7 21.2 52.8 31.8 20.9 96.7 55.0 41.7 105.0 64.0 41.0
3. Primary Income 5.0 14.3 -9.3 6.8 15.7 -8.8 10.1 26.9 -16.8 12.7 27.7 -15.1
4. Secondary Income 20.4 2.0 18.4 22.0 2.0 20.0 38.6 3.2 35.4 41.9 4.0 38.0
B. Capital Account and Financial Account 152.7 168.8 -16.2 142.2 133.8 8.4 280.5 315.5 -35.0 280.5 257.5 23.0
  Of which:                        
Change in Reserves (Increase (-)/Decrease (+)) 0.0 31.6 -31.6 0.0 5.1 -5.1 0.0 51.4 -51.4 0.0 19.1 -19.1
C. Errors & Omissions (-) (A+B) 0.6   0.6   0.9 -0.9 0.2   0.2   0.5 -0.5
P: Preliminary
Note: Total of subcomponents may not tally with aggregate due to rounding off.

(Yogesh Dayal)     
Chief General Manager

Press Release: 2020-2021/853


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