NRIs pull out deposits, FDI numbers decline

The huge inflow of NRI deposits had become a headache for the central bank as it was finding it tough to get good returns on its forex reserves.

Foreign direct investment (FDI) in India has declined by 12.75 per cent to $ 3.033 billion in fiscal 2004-05 from $3.420 billion in the previous year, as per figures released by the RBI on Thursday.

However, when compared with China, India’s FDI inflow is peanuts. China’s net FDI increased 17 per cent to $54.94 billion in 2004.

According to RBI, foreign portfolio investment in the stock market also declined during the year to $8.908 billion from $11.356 billion in 2003-04. But corporates went on raising funds abroad. External commercial borrowings shot up to $5.948 billion as against an outflow of $1.526 billion in the previous year.

India’s total external debt has been placed at $123.3 billion at the end of March 2005, an increase of 10.04 per cent or $11.6 bn, the highest accretion in any single year starting from 1990-91.

Total external debt as at the end of March 2004 was $111.7 billion.

External commercial borrowings (ECBs), trade credits (short and long-term), multilateral debt and NRI deposits were the key drivers to the growth in the external debt stock, the banking regulator said, adding, bilateral and rupee debt had recorded a decline during this period.

Historic trade deficit

MUMBAI: Thanks to a sharp rise in oil imports bill and merchandise, India’s balance of payments (BoP) for 2004-05 saw a historic high trade deficit of $ 38.1 billion as against $15.4 bn in the previous fiscal. Current account slipped into a modest deficit of $6.4 billion after a three-year span of continuous surpluses.

In the face of fast growing economy, imports outpaced exports by registering a high of $118.96 bn during 2004-05 as against $80.17 bn in the previous fiscal, while exports grew to $80.83 bn ($64.72 bn in 2003-04), according to data released by RBI.