India reported a current account surplus of 0.9 per cent of GDP in the pandemic-hit FY21 as against a shortfall of 0.9 per cent in FY10, data released by the RBI showed on Wednesday. . The country’s current account deficit widened to USD 8.1 billion or 1 per cent of GDP for the March quarter, as against USD 0.6 billion or 0.1 per cent of GDP in the year-ago period and 0.3 per cent in the previous fiscal. There was a loss of percentage. According to central bank data, the preceding December quarter.
CAD, the difference between a country’s overall foreign receipts and payments, is an important factor representing the strength of a country’s external sector. The Reserve Bank of India said the current account balance slipped into surplus territory due to a sharp contraction in the trade deficit to USD 102.2 billion from USD 157.5 billion in 2019-20.
It said that net invisible receipts were lower in FY21 on account of increase in net outgo of foreign investment income payments and lower net private transfer receipts, even though net service receipts were higher as compared to the year-ago period. The central bank said that despite the pandemic, net foreign direct investment of USD 44 billion in FY21 was up from USD 43.0 billion in 2019-20.
It added that net foreign portfolio investment also increased by US$ 36.1 billion in FY21 from US$ 1.4 billion a year ago. RBI data shows that external commercial borrowing by India Inc registered an inflow of USD 0.2 billion as compared to USD 21.7 billion in 2019-20.
It said that on a balance of payments basis, there has been an increase in foreign exchange reserves by US $ 87.3 billion. RBI said the current account deficit in the March quarter was higher mainly on account of higher trade deficit and lower net invisible receipts as compared to the corresponding period of the previous year.
Private transfer receipts, which mainly represent remittances by Indians working abroad, rose to US$ 20.9 billion, up 1.7 per cent from the year-ago level. According to the data, net expenditure from the primary income account, which mainly reflects net foreign investment income payments, increased to US$8.7 billion, from US$4.8 billion a year ago.
Net FDI during the March quarter stood at $2.7 billion, up from $12 billion in the year-ago period. Net Foreign Portfolio Investment (FPI) increased by USD 7.3 billion mainly on account of net purchases in the equity market, as against a decline of USD 13.7 billion in Q4 FY20. RBI said India’s net external commercial borrowings stood at US$6.1 billion in the March quarter, up from US$9.4 billion a year ago.
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