India’s Q2 balance of payments: All you should know

Zee Media Bureau

The current account deficit (CAD) narrowed to 1.6 percent of GDP at USD 8.2 billion in the second quarter ended September, mainly due to lower trade deficit.

Key features of India’s balance of payments in Q2 of 2015-16:

-India’s current account deficit (CAD) at USD 8.2 billion (1.6 percent of GDP) in Q2 of 2015-16 was lower than USD 10.9 billion (2.2 percent of GDP) in Q2 of 2014-15 but increased from USD 6.1 billion (1.2 percent of GDP) in the preceding quarter.

-The contraction in CAD was primarily on account of lower trade deficit (USD 37.4 billion) as compared with USD 39.7 billion in Q2 of last year though it was higher than the level in the preceding quarter (USD 34.2 billion).

-Although net services receipts moderated marginally on a y-o-y basis largely due to fall in export receipts in transport, insurance and pension services, there has been some improvement over the preceding quarter.

-Private transfer receipts, mainly representing remittances by Indians employed overseas, amounted to USD 16.5 billion, a marginal decline from their level in the preceding as well as the corresponding quarter.

-After a sharp pick up in Q1, net foreign direct investment moderated in Q2 of 2015-16.

-There has been net outflow of portfolio investment to the tune of USD 6.5 billion as against net inflow of USD 9.8 billion in Q2 of last year; outflow was more evident in the equity segment.

-Non-resident Indian (NRI) deposits, however, increased by 4 percent in Q2 of 2015-16 over the level in Q2 of last year.

-Foreign exchange reserves (on BoP basis) decreased by USD 0.9 billion in Q2 of 2015-16.