Services Exports Grew Due To Software, Business And Travel Services
Net outgo on the primary income account, primarily reflecting payments of investment income, increased to US$ 12.2 billion from US$ 11.8 billion a year ago
FinTech BizNews Service
Mumbai, December 27, 2023: Preliminary data on India’s balance of payments (BoP) for the second quarter (Q2), i.e., July-September 2023-24, are presented by the RBI in Statements I (BPM6 format) and II (old format).
Key Features of India’s BoP in Q2:2023-24
- India’s current account balance recorded a deficit of US$ 8.3 billion (1.0 per cent of GDP) in Q2:2023-24, lower than US$ 9.2 billion (1.1 per cent of GDP) in Q1:2023-24 and US$ 30.9 billion (3.8 per cent of GDP) a year ago [i.e., Q2:2022-23]1.
- Underlying the lower current account deficit on a year-on-year (y-o-y) basis in Q2:2023-24 was the narrowing of merchandise trade deficit to US$ 61.0 billion from US$ 78.3 billion in Q2:2022-23.
- Services exports grew by 4.2 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 on a y-o-y basis.
- Net outgo on the primary income account, primarily reflecting payments of investment income, increased to US$ 12.2 billion from US$ 11.8 billion a year ago.
- Private transfer receipts, mainly representing remittances by Indians employed overseas, amounted to US$ 28.1 billion, an increase of 2.6 per cent from their level during the corresponding period a year ago.
- In the financial account, net foreign direct investment witnessed an outflow of US$ 0.3 billion as against an inflow of US$ 6.2 billion in Q2:2022-23.
- Foreign portfolio investment recorded net inflow of US$ 4.9 billion, lower than US$ 6.5 billion during Q2:2022-23.
- External commercial borrowings to India recorded net outflow of US$ 1.8 billion in Q2:2023-24 as compared with net outflow of US$ 0.5 billion in Q2:2022-23.
- Non-resident deposits recorded net inflow of US$ 3.2 billion as compared with net inflow of US$ 2.5 billion in Q2:2022-23.
- There was an accretion of foreign exchange reserves (on a BoP basis) to the tune of US$ 2.5 billion in Q2:2023-24 as against a depletion of US$ 30.4 billion in Q2:2022-23.
BoP During April-September 2023 (H1:2023-24)
- India’s current account deficit moderated to 1.0 per cent of GDP in H1:2023-24 from 2.9 per cent of GDP in H1:2022-23 on the back of a lower merchandise trade deficit.
- Net invisibles receipts were higher in H1:2023-24 on a y-o-y basis primarily on account of higher net services receipts.
- Net FDI inflow at US$ 4.8 billion in H1:2023-24 was lower than US$ 19.6 billion in H1:2022-23.
- Portfolio investment recorded a net inflow of US$ 20.7 billion in H1:2023-24 as against an outflow of US$ 8.1 billion a year ago.
- In H1:2023-24, there was an accretion of US$ 27.0 billion to the foreign exchange reserves (on a BoP basis).
Preliminary data on India’s balance of payments (BoP) for the second quarter (Q2), i.e., July-September 2023-24, are presented in Statements I (BPM6 format) and II (old format). Key Features of India’s BoP in Q2:2023-24 - India’s current account balance recorded a deficit of US$ 8.3 billion (1.0 per cent of GDP) in Q2:2023-24, lower than US$ 9.2 billion (1.1 per cent of GDP) in Q1:2023-24 and US$ 30.9 billion (3.8 per cent of GDP) a year ago [i.e., Q2:2022-23]1.
- Underlying the lower current account deficit on a year-on-year (y-o-y) basis in Q2:2023-24 was the narrowing of merchandise trade deficit to US$ 61.0 billion from US$ 78.3 billion in Q2:2022-23.
- Services exports grew by 4.2 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 on a y-o-y basis.
- Net outgo on the primary income account, primarily reflecting payments of investment income, increased to US$ 12.2 billion from US$ 11.8 billion a year ago.
- Private transfer receipts, mainly representing remittances by Indians employed overseas, amounted to US$ 28.1 billion, an increase of 2.6 per cent from their level during the corresponding period a year ago.
- In the financial account, net foreign direct investment witnessed an outflow of US$ 0.3 billion as against an inflow of US$ 6.2 billion in Q2:2022-23.
- Foreign portfolio investment recorded net inflow of US$ 4.9 billion, lower than US$ 6.5 billion during Q2:2022-23.
- External commercial borrowings to India recorded net outflow of US$ 1.8 billion in Q2:2023-24 as compared with net outflow of US$ 0.5 billion in Q2:2022-23.
- Non-resident deposits recorded net inflow of US$ 3.2 billion as compared with net inflow of US$ 2.5 billion in Q2:2022-23.
- There was an accretion of foreign exchange reserves (on a BoP basis) to the tune of US$ 2.5 billion in Q2:2023-24 as against a depletion of US$ 30.4 billion in Q2:2022-23 (Table 1).
BoP During April-September 2023 (H1:2023-24) - India’s current account deficit moderated to 1.0 per cent of GDP in H1:2023-24 from 2.9 per cent of GDP in H1:2022-23 on the back of a lower merchandise trade deficit.
- Net invisibles receipts were higher in H1:2023-24 on a y-o-y basis primarily on account of higher net services receipts.
- Net FDI inflow at US$ 4.8 billion in H1:2023-24 was lower than US$ 19.6 billion in H1:2022-23.
- Portfolio investment recorded a net inflow of US$ 20.7 billion in H1:2023-24 as against an outflow of US$ 8.1 billion a year ago.
- In H1:2023-24, there was an accretion of US$ 27.0 billion to the foreign exchange reserves (on a BoP basis).
Table 1: Major Items of India's Balance of Payments | (US$ Billion) | | July-September 2023 P | July-September 2022 | April-September 2023 P | April-September 2022 | | Credit | Debit | Net | Credit | Debit | Net | Credit | Debit | Net | Credit | Debit | Net | A. Current Account | 231.6 | 239.9 | -8.3 | 225.3 | 256.2 | -30.9 | 453.0 | 470.5 | -17.5 | 456.4 | 505.2 | -48.8 | 1. Goods | 108.5 | 169.5 | -61.0 | 111.9 | 190.2 | -78.3 | 213.5 | 331.1 | -117.7 | 234.6 | 376.0 | -141.4 | Of which: | | | | | | | | | | | | | POL | 22.8 | 40.8 | -17.9 | 23.9 | 53.4 | -29.5 | 41.8 | 82.6 | -40.7 | 50.8 | 106.6 | -55.8 | 2. Services | 83.4 | 43.4 | 40.0 | 80.0 | 45.6 | 34.4 | 163.9 | 88.9 | 75.1 | 156.1 | 90.6 | 65.5 | 3. Primary Income | 11.6 | 23.8 | -12.2 | 6.0 | 17.8 | -11.8 | 20.3 | 43.1 | -22.8 | 12.5 | 33.2 | -20.6 | 4. Secondary Income | 28.1 | 3.2 | 25.0 | 27.5 | 2.7 | 24.8 | 55.3 | 7.4 | 47.9 | 53.1 | 5.4 | 47.7 | B. Capital Account and Financial Account | 202.5 | 195.1 | 7.5 | 180.3 | 148.5 | 31.8 | 384.3 | 367.0 | 17.3 | 373.2 | 323.9 | 49.3 | Of which: | | | | | | | | | | | | | Change in Reserves [Increase (-)/Decrease (+)] | 0.0 | 2.5 | -2.5 | 30.4 | 0.0 | 30.4 | 0.0 | 27.0 | -27.0 | 30.4 | 4.6 | 25.8 | C. Errors & Omissions (-) (A+B) | 0.8 | 0.0 | 0.8 | 0.0 | 0.9 | -0.9 | 0.8 | 0.6 | 0.2 | 0.5 | 0.9 | -0.4 | P: Preliminary. |
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