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Date : Mar 31, 2021
Developments in India’s Balance of Payments during the Third Quarter (October-December) of 2020-21

Preliminary data on India’s balance of payments (BoP) for the third quarter (Q3), i.e., October-December 2020-21, are presented in Statements I (BPM6 format) and II (old format).

Key Features of India’s BoP in Q3:2020-21

  • India’s current account balance recorded a deficit of US$ 1.7 billion (0.2 per cent of GDP) in Q3:2020-21 after a surplus of US$ 15.1 billion (2.4 per cent of GDP) in Q2:2020-21 and US$ 19.0 billion (3.7 per cent of GDP) in Q1:2020-21; a deficit of US$ 2.6 billion (0.4 per cent of GDP) was recorded a year ago [i.e. Q3:2019-20].

  • Underlying the current account deficit in Q3:2020-21 was a rise in the merchandise trade deficit to US$ 34.5 billion from US$ 14.8 billion in the preceding quarter, and an increase in net investment income payments.

  • Net services receipts increased, both sequentially and on a year-on-year basis, primarily on the back of higher net export earnings from computer services.

  • Private transfer receipts, mainly representing remittances by Indians employed overseas, declined marginally on a y-o-y basis but improved sequentially by 1.5 per cent to US$ 20.7 billion in Q3:2020-21.

  • Net outgo on the primary income account, primarily reflecting payments of investment income, increased to US$ 10.1 billion from US$ 7.4 billion a year ago.

  • In the financial account, net foreign direct investment (FDI) recorded robust inflow of US$ 17.0 billion as compared with US$ 9.7 billion in Q3:2019-20.

  • Net foreign portfolio investment (FPI) was US$ 21.2 billion as compared with US$ 7.8 billion in Q3:2019-20, primarily reflecting net purchases by foreign portfolio investors in the equity market.

  • With repayments exceeding fresh disbursals, external commercial borrowings to India recorded net outflow of US$ 1.7 billion in Q3:2020-21 as against an inflow of US$ 3.2 billion a year ago.

  • Net accretions to non-resident deposits increased to US$ 3.0 billion from US$ 0.8 billion in Q3:2019-20.

  • There was an accretion of US$ 32.5 billion to the foreign exchange reserves (on a BoP basis) as compared with that of US$ 21.6 billion in Q3:2019-20 (Table 1).

BoP during April-December 2020

  • India recorded a current account surplus of 1.7 per cent of GDP in April-December 2020 as against a deficit of 1.2 per cent in April-December 2019 on the back of a sharp contraction in the trade deficit.

  • Net invisible receipts were lower in April-December 2020 due to a moderation in net private transfer receipts and an increase in investment income payments.

  • Net FDI inflows at US$ 40.8 billion in April-December 2020 were higher than US$ 31.1 billion in April-December 2019.

  • Net FPI inflows stood at US$ 28.9 billion in April-December 2020, higher than US$ 15.1 billion a year ago.

  • In April-December 2020, there was an accretion of US$ 83.9 billion to the foreign exchange reserves (on a BoP basis).

Table 1: Major Items of India's Balance of Payments
(US$ billion)
  October-December
2020 (P)
October-December
2019
April-December
2020 (P)
April-December
 2019
  Credit Debit Net Credit Debit Net Credit Debit Net Credit Debit Net
A. Current Account 157.4 159.2 -1.7 162.8 165.4 -2.6 430.6 398.2 32.4 485.0 510.2 -25.1
1. Goods 77.2 111.8 -34.5 81.2 117.3 -36.0 205.2 265.4 -60.2 243.9 366.4 -122.5
   Of which:                        
           POL 5.5 21.9 -16.4 10.9 31.5 -20.6 17.6 53.8 -36.3 32.1 96.7 -64.6
2. Services 53.7 30.1 23.6 55.2 33.3 21.9 150.2 85.2 65.0 160.1 97.2 62.9
3. Primary Income 5.7 15.8 -10.1 5.6 12.9 -7.4 15.8 42.9 -27.1 18.2 40.7 -22.5
4. Secondary Income 20.8 1.5 19.3 20.8 1.9 18.9 59.4 4.7 54.7 62.8 5.9 56.9
B. Capital Account and Financial Account 179.5 178.5 1.0 153.2 151.2 2.0 460.8 493.9 -33.1 433.7 408.7 25.0
   Of which:                        
Change in Reserves (Increase (-)/Decrease (+)) 0.0 32.5 -32.5 0.0 21.6 -21.6 0.0 83.9 -83.9 0.0 40.7 -40.7
C. Errors & Omissions (-) (A+B) 0.7 0.0 0.7 0.6 0.0 0.6 0.7 0.0 0.7 0.1 0.0 0.1
P: Preliminary
Note: Total of subcomponents may not tally with aggregate due to rounding off.

(Yogesh Dayal)     
Chief General Manager

Press Release: 2020-2021/1330


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