India reported a current account surplus of 0.9 per cent of GDP in the financial year 2020-21 as against a deficit of 0.9 per cent in 2019-20, data released by the Reserve Bank of India (RBI) showed on Wednesday. For January-March quarter, the country reported a current account deficit of $8.1 billion, or 1 per cent of GDP, as against a current account surplus of $0.6 billion, or 0.1 per cent of GDP, in the corresponding quarter of FY20. In October-December FY21, India had reported a current account deficit of $2.2 billion, or 0.3 per cent of GDP. Current account deficit is the gap between the country's overall foreign receipts and payments, and is an important factor representing a nation's external sector's strength. The current account surplus in FY21 was on account of a sharp contraction in trade deficit to $102.2 billion from $157.5 billion in 2019-20, RBI said. "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," the central bank said. Net FDI (foreign direct investment) inflows stood at $44 billion in 2020-21 as against $43 billion in 2019-20. Net foreign portfolio investments (FPI) also increased by $36.1 billion in FY21 as compared to $1.4 billion a year ago. Also read: Bill Gates was 'angry, unreceptive to suggestions', allege his women colleagues at Microsoft
External commercial borrowings to India recorded inflow of $0.2 billion as compared with $21.7 billion in 2019-20, while there was an accretion of $87.3 billion to foreign exchange reserves on balance of payment basis. The current account deficit in March quarter was primarily on account of a higher trade deficit and lower net invisible receipts than in the corresponding period of the previous year, RBI said. 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 $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 $8.7 billion from $4.8 billion a year ago," RBI said. The net FDI came at USD 2.7 billion during the March quarter as against USD 12 billion in the year-ago period. Net FPI increased by $7.3 billion, mainly on account of net purchases in the equity market, as against a decline of $13.7 billion in the corresponding quarter a year ago. Net external commercial borrowings to India was lower at $6.1 billion in the March quarter as compared to $9.4 billion a year ago, the RBI said. There was an accretion of $3.4 billion to the foreign exchange reserves as compared with an accretion of $18.8 billion in March quarter.
(With PTI inputs)
Also read: Fiscal deficit at 8.2% of FY22 target in May