Preliminary data on India’s balance of payments (BoP) for the fourth quarter (Q4), i.e., January-March, 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 January-March 2014
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India’s current account deficit (CAD) narrowed sharply to US$ 1.2 billion (0.2 per cent of GDP) in Q4 of 2013-14 from US$ 18.1 billion (3.6 per cent of GDP) in Q4 of 2012-13 which was also lower than US$ 4.2 billion (0.9 per cent of GDP) in Q3 of 2013-14. The lower CAD was primarily on account of a decline in the trade deficit as decline in imports was sharper than that in exports.
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On a BoP basis, merchandise exports declined by 1.3 per cent to US$ 83.7 billion in Q4 of 2013-14 as against an increase of 5.9 per cent in Q4 of 2012-13.
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On the other hand, declining trend in merchandise imports (on BoP basis) continued in Q4 of 2013-14. Imports at US$ 114.3 billion moderated by 12.3 per cent in Q4 of 2013-14 as compared with a decline of 1.0 per cent in Q4 of 2012-13. Decline in imports was primarily led by a steep decline in gold imports, which amounted to US$ 5.3 billion, significantly lower than US$ 15.8 billion in Q4 of 2012-13.
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As a result, the merchandise trade deficit (BoP basis) contracted by about 33 per cent to US$ 30.7 billion in Q4 of 2013-14 from US$ 45.6 billion in the corresponding quarter a year ago.
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Net services receipts improved during Q4 of 2013-14 on account of higher exports of services. Net services at US$ 19.6 billion recorded a growth of 15.6 per cent in Q4 of 2013-14 as against a decline of 3.9 per cent in Q4 of 2012-13.
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Net outflow on account of primary income (profit, dividend and interest) amounting to US$ 6.4 billion in Q4 of 2013-14 was higher than that of US$ 5.2 billion in the corresponding quarter of 2012-13 as well as the preceding quarter (US$ 5.4 billion). In Q4 of 2013-14, gross private transfer receipts at US$ 17.3 billion also improved by 3.0 per cent over the corresponding quarter of 2012-13.
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In the financial account, on net basis, both foreign direct investment and portfolio investment recorded inflows in Q4 of 2013-14. While net inflow on account of portfolio investment was US$ 9.3 billion, net FDI flow was lower at US$ 0.9 billion.
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‘Loans’(net) availed by deposit taking corporations (commercial banks) witnessed an outflow of US$ 5.7 billion in Q4 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$ 3.7 billion in Q4 of 2013-14 as compared to US$ 2.8 billion in Q4 of 2012-13. Loans (net) availed by other sectors (i.e., external commercial borrowings) at US$ 4.9 billion also showed an increase of 19.4 per cent over Q4 of 2012-13. Net trade credits and advances, however, continued to show outflow in Q4 of 2013-14 as repayments remained higher than disbursements.
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On a BoP basis, there was a net accretion of US$ 7.1 billion to India’s foreign exchange reserves in Q4 of 2013-14 as compared with US$ 19.1 billion in the preceding quarter (Table 1).
Developments in India’s BoP during 2013-14
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Export recovery and moderation in imports led to a sharp improvement in the trade deficit to US$ 147.6 billion in 2013-14 from US$ 195.7 billion in 2012-13.
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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$ 32.4 billion (1.7 per cent of GDP) from US$ 87.8 billion (4.7 per cent of GDP) in 2012-13.
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Net inflows under the capital and financial account (excluding change in foreign exchange reserves) declined to US$ 48.8 billion in 2013-14 from US$ 89.0 billion in corresponding period of 2012-13 owing to lower net FDI and portfolio flows, net repayment of loans and trade credit & advances.
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On BoP basis, foreign exchange reserves increased by US$ 15.5 billion during 2013-14 as compared with US$ 3.8 billion in 2012-13.
Table 1: Major Items of India's Balance of Payments |
(US$ Billion) |
| |
Jan-Mar 2014 (P) |
Jan-Mar 2013 (PR) |
2013-14 (P) |
2012-13 (PR) |
Credit |
Debit |
Net |
Credit |
Debit |
Net |
Credit |
Debit |
Net |
Credit |
Debit |
Net |
A Current Account |
144.4 |
145.6 |
-1.2 |
142.0 |
160.1 |
-18.1 |
551.4 |
583.7 |
-32.4 |
530.2 |
618.1 |
-87.8 |
1. Goods |
83.7 |
114.3 |
-30.7 |
84.8 |
130.4 |
-45.6 |
318.6 |
466.2 |
-147.6 |
306.6 |
502.2 |
-195.7 |
Of which: |
|
|
|
|
|
|
|
|
|
|
|
|
POL |
14.8 |
42.7 |
-27.9 |
16.1 |
42.2 |
-26.1 |
62.7 |
165.2 |
-102.5 |
60.9 |
164.0 |
-103.2 |
2.Services |
40.6 |
21.0 |
19.6 |
37.8 |
20.9 |
17.0 |
151.5 |
78.5 |
73.0 |
145.7 |
80.8 |
64.9 |
3. Primary Income |
2.8 |
9.2 |
-6.4 |
2.6 |
7.8 |
-5.2 |
11.4 |
34.4 |
-23.0 |
10.3 |
31.7 |
-21.5 |
4. Secondary Income |
17.3 |
1.0 |
16.3 |
16.8 |
1.0 |
15.8 |
69.9 |
4.6 |
65.3 |
67.7 |
3.3 |
64.4 |
B. Capital Account and Financial Account |
127.1 |
125.1 |
2.0 |
133.9 |
116.1 |
17.8 |
523.2 |
490.0 |
33.3 |
473.5 |
388.4 |
85.2 |
Of which: |
|
|
|
|
|
|
|
|
|
|
|
|
Change in Reserve (increase (-) /Decrease (+)) |
0.0 |
7.1 |
-7.1 |
0.0 |
2.7 |
-2.7 |
0.0 |
15.5 |
-15.5 |
0.0 |
3.8 |
-3.8 |
C. Errors & Omissions (-)(A+B) |
|
|
-0.8 |
|
|
0.3 |
|
|
-0.9 |
|
|
2.7 |
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 : 2013-2014/2288 |
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