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Developments in India’s Balance of Payments during the Fourth Quarter (January-March) of 2019-20

Preliminary data on India’s balance of payments (BoP) for the fourth quarter (Q4), i.e., January-March 2019-20, are presented in Statements I (BPM6 format) and II (old format).

Key Features of India’s BoP in Q4 of 2019-20

  • India’s current account balance (CAB) recorded a marginal surplus of US$ 0.6 billion (0.1 per cent of GDP) in Q4 of 2019-20 as against a deficit of US$ 4.6 billion (0.7 per cent of GDP) in Q4 of 2018-19 and US$ 2.6 billion (0.4 per cent of GDP) in the preceding quarter, i.e., Q3 of 2019-20.

  • The surplus in the current account in Q4 of 2019-20 was primarily on account of a lower trade deficit at US$ 35.0 billion and a sharp rise in net invisible receipts at US$ 35.6 billion as compared with the corresponding period of last year.

  • Net services receipts increased on the back of a rise in net earnings from computer and travel services on a year-on-year basis.

  • Private transfer receipts, mainly representing remittances by Indians employed overseas, increased to US$ 20.6 billion, up by 14.8 per cent from their level a year ago.

  • Net outgo from the primary income account, primarily reflecting net overseas investment income payments, decreased to US$ 4.8 billion from US$ 6.9 billion a year ago.

  • In the financial account, net foreign direct investment at US$ 12.0 billion was higher than US$ 6.4 billion in Q4 of 2018-19.

  • Foreign portfolio investment (FPI) declined by US$ 13.7 billion as against an increase of US$ 9.4 billion in Q4 of 2018-19 – on account of net sales in both the debt and equity markets.

  • Net inflow on account of external commercial borrowings to India was US$ 9.4 billion in Q4 of 2019-20 as compared with US$ 7.2 billion a year ago.

  • Owing to COVID-19 related uncertainty, net inflows under ‘other capital’ surged during the quarter, reflecting inter alia the FPIs’ outstanding balances with custodian banks and pending issuance of shares by FDI companies.

  • There was an accretion of US$ 18.8 billion to the foreign exchange reserves (on a BoP basis) as compared with an accretion of US$ 14.2 billion in Q4 of 2018-19 (Table 1).

BoP during 2019-20

  • The CAD narrowed to 0.9 per cent of GDP in 2019-20 from 2.1 per cent in 2018-19 on the back of the trade deficit which shrank to US$ 157.5 billion in 2019-20 from US$ 180.3 billion in 2018-19.

  • Net invisible receipts were higher in 2019-20 mainly due to increase in net services earnings and private transfer receipts.

  • Net FDI inflows at US$ 43.0 billion in 2019-20 were higher than US$ 30.7 billion in 2018-19.

  • Portfolio investment increased by US$ 1.4 billion in 2019-20 as against an outflow of US$ 2.4 billion a year ago.

  • In 2019-20, there was an accretion of US$ 59.5 billion to foreign exchange reserves (on a BoP basis).

Table 1: Major Items of India's Balance of Payments
(US$ billion)
  January-March 2020 P January-March 2019 2019-20 P 2018-19
  Credit Debit Net Credit Debit Net Credit Debit Net Credit Debit Net
A. Current Account 157.1 156.5 0.6 165.2 169.8 -4.6 642.1 666.7 -24.6 643.7 700.9 -57.2
1. Goods 76.5 111.6 -35.0 87.4 122.6 -35.2 320.4 477.9 -157.5 337.2 517.5 -180.3
   Of which:                        
           POL 9.2 33.7 -24.6 9.9 32.4 -22.5 42.8 129.4 -86.6 46.5 140.9 -94.4
2. Services 53.1 31.0 22.0 54.6 33.3 21.3 213.2 128.3 84.9 208.0 126.1 81.9
3. Primary Income 7.0 11.8 -4.8 5.2 12.1 -6.9 25.2 52.4 -27.3 21.8 50.7 -28.9
4. Secondary Income 20.6 2.2 18.4 18.0 1.8 16.2 83.4 8.0 75.3 76.6 6.6 70.0
B. Capital Account and Financial Account 176.3 177.8 -1.5 159.0 153.9 5.1 610.0 586.5 23.6 560.0 502.3 57.7
   Of which:                        
Change in Reserves (Increase (-)/Decrease (+)) 0.0 18.8 -18.8 0.0 14.2 -14.2 0.0 59.5 -59.5 17.5 14.2 3.3
C. Errors & Omissions (-) (A+B) 0.9   0.9   0.4 -0.4 1.0   1.0   0.5 -0.5
P: Preliminary
Note: Total of subcomponents may not tally with aggregate due to rounding off.

(Yogesh Dayal)     
Chief General Manager

Press Release: 2019-2020/2568

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