Preliminary data on India’s balance of payments (BoP) for the third quarter (Q3), i.e., October-December 2013, of the financial year 2013-14, are now available and presented in Statements I and II. While Statement I presents BoP data in BPM6 format, Statement II provides the same as per the old format.
Developments in India’s BoP during October-December 2013
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India’s current account deficit (CAD) narrowed sharply to US$ 4.2 billion (0.9 per cent of GDP) in Q3 of 2013-14 from US$ 31.9 billion (6.5 per cent of GDP) in Q3 of 2012-13 which is also lower than US$ 5.2 billion (1.2 per cent of GDP) in Q2 of 2013-14. The lower CAD was primarily on account of a decline in the trade deficit as merchandise exports picked up and imports moderated, particularly gold imports.
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On a BoP basis, merchandise exports increased by 7.5 per cent to US$ 79.8 billion in Q3 of 2013-14 (3.9 per cent in Q3 of 2012-13) on the back of significant growth especially in the exports of engineering goods, readymade garments, iron ore, marine products and chemicals.
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On the other hand, merchandise imports at US$ 112.9 billion, recorded a decline of 14.8 per cent in Q3 of 2013-14 as against an increase of 10.4 per cent in Q3 of 2012-13. Decline in imports in Q3 was primarily led by a steep decline in gold imports, which amounted to US$ 3.1 billion as compared to US$ 17.8 billion in Q3 of 2012-13 and US$ 3.9 billion in Q2 of 2013-14.
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As a result, the merchandise trade deficit (BoP basis) contracted by around 43 per cent to US$ 33.2 billion in Q3 of 2013-14 from US$ 58.4 billion a year ago.
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Net services receipts improved during Q3 of 2013-14, essentially reflecting a decline in payments on account of services imports. Net services at US$ 18.1 billion recorded a growth of 8.9 per cent in Q3 of 2013-14 (y-o-y).
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Net outflow on account of primary income (profit, dividend and interest) amounting to US$ 5.4 billion in Q3 of 2013-14 was relatively lower than that in the corresponding quarter (US$ 5.8 billion) of 2012-13 as well as the preceding quarter (US$ 6.3 billion). In Q3 of 2013-14, gross private transfer receipts at US$ 17.3 billion showed an increase of 4.8 per cent (y-o-y).
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In the financial account, on net basis, both foreign direct investment and portfolio investment recorded inflows of US$ 6.1 billion and US$ 2.4 billion, respectively in Q3 of 2013-14. Within portfolio investment, the debt segment showed net outflow in Q3 which, however, was offset by higher net inflows of US$ 6.2 billion under the category of equity.
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‘Loans’(net) availed by deposit taking corporations (commercial banks) witnessed an outflow of US$ 5.9 billion in Q3 of 2013-14 owing to repayments of overseas borrowings and a build-up of their overseas foreign currency assets. Under ‘currency & deposits’, net inflows of NRI deposits amounted to US$ 21.4 billion in Q3 of 2013-14 as compared to US$ 2.7 billion in Q3 of 2012-13. A sharp increase in NRI deposits was on account of fresh FCNR(B) deposits mobilised under the swap scheme offered by the Reserve Bank during September-November 2013. Loans (net) availed by other sectors (i.e., external commercial borrowings) at US$ 4.1 billion also showed an increase of 42.1 per cent over Q3 of 2012-13. Net flows under trade credits and advances, however, continued to be negative in Q3 of 2013-14 as repayments remained higher than disbursements.
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On a BoP basis, there was a net accretion of US$ 19.1 billion to India’s foreign exchange reserves in Q3 of 2013-14 as compared to a drawdown of US$ 10.4 billion in the preceding quarter (Table 1).
Developments in India’s BoP during April-December 2013
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The turnaround in export growth and decline in imports from July 2013 onwards led to a sharp improvement in the trade deficit to US$ 116.9 billion in April-December 2013 from US$ 150.0 billion in April-December 2012.
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Contraction in the trade deficit, coupled with a rise in net invisibles receipts, resulted in a reduction of the CAD to US$ 31.1 billion (2.3 per cent of GDP) in April-December 2013 from US$ 69.8 billion (5.2 per cent of GDP) in April-December of 2012.
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Net inflows under the capital and financial account (excluding change in foreign exchange reserves) declined to US$ 39.7 billion in April-December 2013 from US$ 68.5 billion in corresponding period of 2012-13 owing to net outflows on account of portfolio investment, higher repayment of loans, and trade credit & advances.
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On BoP basis, foreign exchange reserves increased by US$ 8.4 billion during April-December 2013 as compared with an accretion of US$ 1.1 billion in April-December 2012.
Table 1: Major Items of India's Balance of Payments |
(US$ Billion) |
|
Oct-Dec 2013 (P) |
Oct-Dec 2012 (PR) |
Apr-Dec 2013-14 (P) |
Apr-Dec 2012-13 (PR) |
|
Credit |
Debit |
Net |
Credit |
Debit |
Net |
Credit |
Debit |
Net |
Credit |
Debit |
Net |
A. Current Account |
137.7 |
141.9 |
-4.2 |
130.5 |
162.3 |
-31.9 |
407.0 |
438.2 |
-31.1 |
388.2 |
458.0 |
-69.8 |
1. Goods |
79.8 |
112.9 |
-33.2 |
74.2 |
132.6 |
-58.4 |
234.9 |
351.9 |
-116.9 |
221.8 |
371.8 |
-150.0 |
Of which: |
|
|
|
|
|
|
|
|
|
|
|
|
POL |
14.9 |
42.2 |
-27.3 |
17.3 |
41.8 |
-24.5 |
47.2 |
125.2 |
-77.9 |
44.8 |
121.8 |
-77.1 |
2.Services |
37.6 |
19.5 |
18.1 |
37.1 |
20.4 |
16.6 |
110.8 |
57.5 |
53.4 |
107.9 |
59.9 |
48.0 |
3. Primary Income |
3.0 |
8.4 |
-5.4 |
2.7 |
8.5 |
-5.8 |
8.6 |
25.2 |
-16.6 |
7.6 |
23.9 |
-16.3 |
4. Secondary Income |
17.3 |
1.0 |
16.3 |
16.5 |
0.8 |
15.7 |
52.6 |
3.6 |
49.0 |
50.9 |
2.3 |
48.6 |
B. Capital Account and Financial Account |
129.3 |
124.5 |
4.8 |
120.2 |
89.5 |
30.8 |
396.1 |
364.9 |
31.3 |
339.6 |
272.2 |
67.4 |
Of which: |
|
|
|
|
|
|
|
|
|
|
|
|
Change in Reserve (increase (-)/ Decrease (+)) |
|
19.1 |
-19.1 |
|
0.8 |
-0.8 |
|
8.4 |
-8.4 |
|
1.1 |
-1.1 |
C. Errors & Omissions (-)(A+B) |
|
|
-0.6 |
|
|
1.1 |
|
|
-0.1 |
|
|
2.4 |
P: Preliminary; PR: Partially Revised |
Note: Total of subcomponents may not tally with aggregate due to rounding off. |
Alpana Killawala
Principal Chief General Manager
Press Release : 2013-2014/1752
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