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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