The current account surplus moderated to $15.5 billion (2.4 per cent of GDP) in the quarter ended September of 2020-21 from $19.2 billion (3.8 per cent of GDP) in the first quarter this fiscal. According to the RBI, a deficit of $7.6 billion (1.1 per cent of GDP) was recorded a year ago — Q2 of 2019-20.
The narrowing of the current account surplus in Q2 of FY21 was on account of a rise in the merchandise trade deficit to $14.8 billion from $10.8 billion in the preceding quarter, the Reserve Bank of India (RBI) said.
It said the net services receipts increased both sequentially and on a year-on-year (y-o-y) basis, primarily on the back of higher net earnings from computer services. Private transfer receipts, mainly representing remittances by Indians employed overseas, declined on a y-o-y basis but improved sequentially by 12 per cent to $20.4 billion in Q2FY21.
The central bank further said net outgo from the primary income account, primarily reflecting net overseas investment income payments, increased to $9.3 billion from $8.8 billion a year ago.
In the financial account, net foreign direct investment (FDI) recorded robust inflow of $24.6 billion as against $7.3 billion in the second quarter of 2019-20.
Net foreign portfolio investment (FPI) was $7 billion as compared with $2.5 billion in Q2FY20, largely reflecting net purchases in the equity market. With repayments exceeding fresh disbursals, external commercial borrowings to India recorded net outflow of $4.1 billion in Q2 of 2020-21 as against an inflow of $3.1 billion a year ago, the RBI added.
Net accretions to non-resident deposits moderated to $1.9 billion from $2.3 billion in the second quarter last fiscal. There was an accretion of $31.6 billion to the foreign exchange reserves (on a BoP basis) as compared with that of $5.1 billion in Q2 of 2019-20.
The country recorded a current account surplus of 3.1 per cent of gross domestic product (GDP) in the first half this fiscal as against a deficit of 1.6 per cent in H1 of 2019-20.
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