Developments in India’s Balance of Payments during the Third Quarter (October-December) of 2023-24
FinTech BizNews Service
Mumbai, March 26, 2024: Preliminary data on India’s balance of payments (BoP) for the third quarter (Q3), i.e., October-December 2023-24, are presented.
Key Features of India’s BoP in Q3:2023-24
India’s current account balance recorded a deficit of US$ 10.5 billion (1.2 per cent of GDP) in Q3:2023-24, lower than US$ 11.4 billion (1.3 per cent of GDP) in Q2:2023-241 and US$ 16.8 billion (2.0 per cent of GDP) a year ago [i.e., Q3:2022-23]2.
The merchandise trade deficit at US$ 71.6 billion was marginally higher than US$ 71.3 billion during Q3:2022-23.
Services exports grew by 5.2 per cent on a y-o-y basis on the back of rising exports of software, business and travel services. Net services receipts increased both sequentially and from a year ago that helped cushion the current account deficit.
Net outgo on the primary income account, primarily reflecting payments of investment income, increased to US$ 13.2 billion from US$ 12.7 billion a year ago.
Private transfer receipts, mainly representing remittances by Indians employed overseas, amounted to US$ 31.4 billion, an increase of 2.1 per cent over their level during the corresponding period a year ago.
In the financial account, foreign direct investment recorded a net inflow of US$ 4.2 billion as compared with a net inflow of US$ 2.0 billion in Q3:2022-23.
Foreign portfolio investment recorded a net inflow of US$ 12.0 billion, higher than US$ 4.6 billion during Q3:2022-23.
External commercial borrowings to India recorded a net outflow of US$ 2.6 billion in Q3:2023-24 as compared with a net outflow of US$ 2.5 billion a year ago.
Non-resident deposits recorded a higher net inflow of US$ 3.9 billion than US$ 2.6 billion a year ago.
There was an accretion of foreign exchange reserves (on a BoP basis) to the tune of US$ 6.0 billion in Q3:2023-24 as compared with an accretion of US$ 11.1 billion a year ago.
BoP During April-December 2023
India’s current account deficit moderated to 1.2 per cent of GDP during April-December 2023 from 2.6 per cent of GDP in the corresponding period a year ago on the back of a lower merchandise trade deficit.
Net invisibles receipts were higher during April-December 2023 than a year ago, primarily on account of services and transfers.
Net FDI inflow at US$ 8.5 billion during April-December 2023 was lower than US$ 21.6 billion during April-December 2022.
During April-December 2023, portfolio investment recorded a net inflow of US$ 32.7 billion as against an outflow of US$ 3.5 billion during the corresponding period a year ago.
In April-December 2023, there was an accretion of US$ 32.9 billion to the foreign exchange reserves (on a BoP basis that excludes valuation effects).
