Preliminary data on India’s balance of payments (BoP) for the Fourth quarter (Q4) i.e., January-March of the financial year 2014-15 are presented in Statements I (BPM6 format) and II (old format).

Key Features of India’s BoP in Q4 2014-15

• On a quarter-over-quarter (q-o-q) basis, India’s current account deficit (CAD) narrowed sharply to US$ 1.3 billion (0.2 per cent of GDP) in Q4 of 2014-15 from US$ 8.3 billion (1.6 per cent of GDP) in Q3; on a year-on-year (y-o-y) basis, however, the CAD was a shade higher (US$ 1.2 billion or 0.2 per cent of GDP in Q4 of 2013-14).

• The merchandise trade deficit (US$ 31.7 billion during Q4 2014-15) contracted sharply on a q-o-q basis on account of a larger decline in merchandise imports (13.4 per cent) than in merchandise exports (10.4 per cent); however, in terms of y-o-y changes, the trade deficit in Q4 2014-15 widened marginally as exports registered a larger decline (15.4 per cent), than imports (10.4 per cent).

• The reduction in the CAD in Q4 2014-15 was primarily on account of lower trade deficit as net earnings through services and primary income (profit, dividend & interest) witnessed a decline in q-o-q terms albeit secondary income recorded a marginal increase of 0.4 per cent.

• Gross private transfer receipts, representing remittances by Indians employed overseas amounted to US$ 17.5, witnessing a marginal increase of 0.4 per cent on q-o-q basis and an increase of 1.2 per cent from the level a year ago.

• In the financial account, net inflows of foreign direct and portfolio investment were higher on a q-o-q basis, though net loans availed by banks witnessed an outflow US$ 3.5 billion mainly on account of increase in balances of foreign currency assets held abroad by banks.

• During Q4 of 2014-15, on a BoP basis, there was highest ever net accretion of US$ 30.1 billion to India’s foreign exchange reserves in a single quarter; it was more than double the accretion in the preceding quarter and almost four times of the reserves accrued in Q4 of 2013-14 (Table 1) signifying record increase in capital inflows and dip in current account deficit.

BoP during April-March 2015

• On a cumulative basis, the overall BoP during 2014-15 showed improvement over the preceding year. Lower CAD, on the back of contraction in trade deficit and marginal improvement in the net invisible earnings, along with a sizable increase in net financial flows enabled a large build-up of reserves.

• India’s trade deficit narrowed to US$ 144.2 billion in 2014-15 from US$ 147.6 billion in 2013-14. With modest increase in invisibles supported by some improvement in net services receipts, the CAD tracked the trade deficit and shrank to US$ 27.5 billion in 2014-15 (1.3 per cent of GDP) from US$ 32.4 billion (1.7 per cent of GDP) a year ago.

• Net inflows under the capital and financial account (excluding change in foreign exchange reserves) rose to US$ 89.5 billion during 2014-15 from US$ 48.7 billion in the previous year.

• There was an accretion to India’s foreign exchange reserves to the tune of US$ 61.4 billion in 2014-15 as compared with US$ 15.5 billion in 2013-14.

• At the end of March 2015, the level of foreign exchange reserves stood at US$ 341.6 billion.

Alpana Killawala
Principal Chief General Manager

Press Release : 2014-2015/2616