India earned a surplus of $325 million on current account in the balance of payments
during April-June 2002. This was the third consecutive quarter of a surplus in
the current account. The fiscal 2001-02 had recorded an overall surplus after 22
years of deficit. While the net earnings from invisibles remained at the
year-ago level, the turnaround from a deficit to surplus was made possible by a
sharp reduction in merchandise deficit.
While the surplus on current account is a welcome
development, it also indicates a reverse flow of foreign capital. Current
account deficit, broadly implying an equivalent foreign capital inflow,
supplements domestic saving to finance domestic capital investment.
Deficit in
merchandise trade as measured on payments basis and reported by Reserve Bank of
India amounted to $3.054 billion during the quarter. Trade deficit as
measured by customs clearances and reported by DGCI&S in its foreign trade
statistics worked out to $1.67 billion, roughly one-half of that reported on the
payments basis. Though not strictly comparable due to different systems of
recording transactions and coverage of items, the statistics disseminated by
these two premier agencies when viewed in conjunction give a broader perspective
on India’s external trade.
- Strong Invisibles
- Earnings from invisibles help bring down deficit in
merchandise trade.
Private transfers, broadly workers remittances,
improved to $3.56 billion, from an average of $3.1 billion in the preceding two
quarters.
Net earnings from ‘Miscellaneous’ category
declined from $1.16 billion to $0.96 billion. The category includes
software/consultancy exports, management service incomes, etc.
Net income from travel/tourism turned negative during
the quarter, like it did a year ago. This would imply that the Indian tourists
going abroad spent more than what foreign tourists spent in India. Net outgo on
account of interest/dividend repatriated abroad was placed at
$1.083 billion.
- Loans decline
- Loans, which include commercial borrowings, external
assistance, etc declined by $1.527 billion. It had declined by $0.917
billion during 2001-02-- it was the first decline over past thirty years or
so.
Foreign investment was placed at $0.744 billion. FDI
investment was $1.066 billion. Portfolio investment saw a net outflow of
$238 million. Investment abroad by Indians amounted to $84 million.
- Forex reserves bulge continues
- Forex reserves expanded sharply by $1.665 billion
during the first quarter of 2002-03. It had expanded by $11.8 billion during
2001-02, twice the rise in the preceding year.
|
Balance
of Payments: $ million
|
|
|
2001-02
|
2002-03
|
|
|
Apr-June
|
July-Sept
|
Oct-Dec
|
Jan-Mar
|
Apr-June
|
|
Current
account
|
|
I.Merchandise deficit
|
3732
|
3804
|
2886
|
2281
|
3054
|
|
II.Invisibles surplus
|
3385
|
2690
|
3681
|
4298
|
3379
|
|
Current account deficit
|
347
|
1114
|
-795
|
-2017
|
-325
|
|
Capital
account inflows
|
|
Foreign Investment
|
1390
|
1173
|
937
|
1786
|
744
|
|
Loans
|
-969
|
-209
|
-431
|
692
|
-1527
|
|
Other inflows
|
1388
|
633
|
2323
|
1693
|
2123
|
|
Growth
of forex reserves
|
|
Forex reserves
|
1462
|
483
|
3624
|
6188
|
1665
|
Email:
mskapadia@projectstoday.com
