Developments in India’s Balance of Payments during the Fourth Quarter (January-March) of 2018-19

Key Features of India’s BoP in Q4 of 2018-19

  • India’s current account deficit (CAD) at US$ 4.6 billion (0.7 per cent of GDP) in Q4 of 2018-19 narrowed from US$ 13.0 billion (1.8 per cent of GDP) in Q4 of 2017-18 and US$ 17.7 billion (2.7 per cent of GDP) in the preceding quarter.
  • The contraction of the CAD on a year-on-year (y-o-y) basis was primarily on account of a lower trade deficit at US$ 35.2 billion as compared with US$ 41.6 billion a year ago.
  • Net services receipts increased by 5.8 per cent on a y-o-y basis mainly on the back of a rise in net earnings from telecommunications, computer and information services.
  • Private transfer receipts, mainly representing remittances by Indians employed overseas, at US$ 17.9 billion declined by 0.9 per cent from their level a year ago.
  • In the financial account, net foreign direct investment at US$ 6.4 billion in Q4 of 2018-19 remained at the same level as in Q4 of 2017-18.
  • Foreign portfolio investment recorded net inflow of US$ 9.4 billion in Q4 of 2018-19 – as compared with US$ 2.3 billion in Q4 a year ago – on account of net purchases in both debt and equity market.
  • Net inflow on account of external commercial borrowings to India increased to US$ 7.2 billion in Q4 of 2018-19 from US$ 1.0 billion a year ago.
  • In Q4 of 2018-19, there was an accretion of US$ 14.2 billion to the foreign exchange reserves (on BoP basis) as compared with US$ 13.2 billion in Q4 of 2017-18 (Table 1).

BoP during 2018-19

  • The CAD increased to 2.1 per cent of GDP in 2018-19 from 1.8 per cent in 2017-18 on the back of widening of the trade deficit.
  • India’s trade deficit increased to US$ 180.3 billion in 2018-19 from US$ 160.0 billion in 2017-18.
  • Net invisible receipts were higher in 2018-19 mainly due to increase in net services earnings and private transfer receipts.
  • Net FDI inflows at US$ 30.7 billion in 2018-19 were marginally higher than US$ 30.3 billion in 2017-18.
  • Portfolio investment recorded a net outflow of US$ 2.4 billion in 2018-19 as against an inflow of US$ 22.1 billion a year ago.
  • In 2018-19, there was a depletion of US$ 3.3 billion of the foreign exchange reserves (on a BoP basis).

Source: RBI Press Release: 2018-2019/3075

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