Preliminary data on India’s balance of payments (BoP) for the fourth quarter (Q4), i.e., January-March 2020-21, are presented in Statements I (BPM6 format) and II (old format).

Key Features of India’s BoP in Q4:2020-21

• India’s current account balance (CAB) recorded a deficit of US$ 8.1 billion (1.0 per cent of GDP) in Q4:2020-21 as against a surplus of US$ 0.6 billion (0.1 per cent of GDP) in Q4:2019-20 and a deficit of US$ 2.2 billion (0.3 per cent of GDP) in the preceding quarter, i.e., Q3:2020-21.

• The current account deficit in Q4:2020-21 was primarily on account of a higher trade deficit and lower net invisible receipts than in the corresponding period of the previous year.

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

• Private transfer receipts, mainly representing remittances by Indians employed overseas, increased to US$ 20.9 billion, up by 1.7 per cent from their level a year ago.

• Net outgo from the primary income account, primarily reflecting net overseas investment income payments, increased to US$ 8.7 billion from US$ 4.8 billion a year ago.

• In the financial account, net foreign direct investment at US$ 2.7 billion was lower than US$ 12.0 billion in Q4:2019-20.

• Net foreign portfolio investment (FPI) increased by US$ 7.3 billion – mainly on account of net purchases in the equity market – as against a decline of US$ 13.7 billion in Q4:2019-20.

• Net external commercial borrowings to India was lower at US$ 6.1 billion in Q4:2020-21 as compared with US$ 9.4 billion a year ago.

• There was an accretion of US$ 3.4 billion to the foreign exchange reserves (on a BoP basis) as compared with an accretion of US$ 18.8 billion in Q4:2019-20 (Table 1).

BoP during 2020-21

• The current account balance recorded a surplus of 0.9 per cent of GDP in 2020-21 as against a deficit of 0.9 per cent in 2019-20 on the back of a sharp contraction in the trade deficit to US$ 102.2 billion from US$ 157.5 billion in 2019-20.

• Net invisible receipts were lower in 2020-21 due to increase in net outgo of overseas investment income payments and lower net private transfer receipts, even though net services receipts were higher than a year ago.

• Net FDI inflows at US$ 44.0 billion in 2020-21 were higher than US$ 43.0 billion in 2019-20.

• Net FPI increased by US$ 36.1 billion in 2020-21 as compared to US$ 1.4 billion a year ago.

• External commercial borrowings to India recorded inflow of US$ 0.2 billion as compared with US$ 21.7 billion in 2019-20.

• In 2020-21, there was an accretion of US$ 87.3 billion to foreign exchange reserves (on a BoP basis).

(Yogesh Dayal)     
Chief General Manager

Press Release: 2021-2022/454