Preliminary data on India’s balance of payments (BoP) for the third quarter (Q3) i.e., October-December 2015-16 are presented in Statements I (BPM6 format) and II (old format).

Key Features of India’s BoP in Q3 of 2015-16

• India’s current account deficit (CAD) at US$ 7.1 billion (1.3 per cent of GDP) in Q3 of 2015-16 was lower than US$ 7.7 billion (1.5 per cent of GDP) in Q3 of 2014-15 and US$ 8.7 billion (1.7 per cent of GDP) in the preceding quarter (Table 1).

• The contraction in CAD was primarily on account of a lower trade deficit (US$ 34.0 billion) than in Q3 of last year (US$ 38.6 billion) and US$ 37.4 billion in the preceding quarter.

• Net services receipts moderated on a y-o-y basis largely due to fall in export receipts in transport and financial services, though there has been marginal improvement over the preceding quarter.

• Private transfer receipts, mainly representing remittances by Indians employed overseas, amounted to US$ 15.8 billion, a decline from their level in the preceding quarter as well as from a year ago.

• After moderating in Q2, net foreign direct investment again picked up and stood at US$ 10.8 billion in Q3.

• There has been a marginal net outflow of US$ 0.2 billion in portfolio investment in Q3 of 2015-16 as against net outflow of US$ 3.5 billion in the preceding quarter; equity outflows in Q3 were almost offset by inflows into the debt segment.

• Non-resident Indian (NRI) deposits moderated significantly in Q3 of 2015-16 over their level in Q3 last year as well as the preceding quarter.

• Foreign exchange reserves (on a BoP basis) increased by US$ 4.1 billion in Q3 of 2015-16.

BoP during April-December 2015

• On a cumulative basis, the CAD narrowed to 1.4 per cent of GDP in April-December 2015 from 1.7 per cent in the corresponding period of 2014-15, on the back of the contraction in the trade deficit.

• India’s trade deficit narrowed to US$ 105.6 billion in April-December 2015 from US$ 113.4 billion during the same period of 2014-15.

• Net invisible receipts declined in April-December 2015, even though moderation in both net services earnings and private transfer receipts was partly offset by a lower net outflow of primary income (profit, interest and dividends).

• Net FDI inflows during April-December 2015 rose sharply by 24.8 per cent over the level during the corresponding period of the previous year.

• Portfolio investment, however, recorded a net outflow US$ 3.7 billion during April-December 2015 as against a net inflow of US$ 28.5 billion last year.

• In April-December 2015, there was an accretion of US$ 14.6 billion to foreign exchange reserves (on a BoP basis) as compared with US$ 31.3 billion in the corresponding period of 2014-15.

Alpana Killawala
Principal Adviser

Press Release : 2015-2016/2216