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Key Features of India’s BoP in Q2 of 2018-19
India’s current account deficit (CAD) at US$ 19.1 billion (2.9 per cent of GDP) in Q2 of 2018-19 increased from US$ 6.9 billion (1.1 per cent of GDP) in Q2 of 2017-18 and US$ 15.9 billion (2.4 per cent of GDP) in the preceding quarter.
The widening of the CAD on a year-on-year (y-o-y) basis was primarily on account of a higher trade deficit at US$ 50.0 billion as compared with US$ 32.5 billion a year ago.
Net services receipts increased by 10.2 per cent on a y-o-y basis mainly on the back of a rise in net earnings from software and financial services.
Private transfer receipts, mainly representing remittances by Indians employed overseas, amounted to US$ 20.9 billion, increasing by 19.8 per cent from their level a year ago.
In the financial account, net foreign direct investment at US$ 7.9 billion in Q2 of 2018-19 moderated from US$ 12.4 billion in Q2 of 2017-18.
Portfolio investment recorded net outflow of US$ 1.6 billion in Q2 of 2018-19 – as compared with an inflow of US$ 2.1 billion in Q2 last year – on account of net sales in both the debt and equity markets.
Net receipts on account of non-resident deposits increased to US$ 3.3 billion in Q2 of 2018-19 from US$ 0.7 billion a year ago.
In Q2 of 2018-19, there was a depletion of US$ 1.9 billion of the foreign exchange reserves (on BoP basis) as against an accretion of US$ 9.5 billion in Q2 of 2017-18 ( Table 1).
BoP during April-September 2018 (H1 of 2018-19)
The CAD increased to 2.7 per cent of GDP in H1 of 2018-19 from 1.8 per cent in H1 of 2017-18 on the back of widening of the trade deficit.
India’s trade deficit increased to US$ 95.8 billion in H1 of 2018-19 from US$ 74.4 billion in H1 of 2017-18.
Net invisible receipts were higher in H1 of 2018-19 mainly due to increase in net services earnings and private transfer receipts.
Net FDI inflows in H1 of 2018-19 moderated to US$ 17.7 billion from US$ 19.6 billion in H1 of 2017-18.
Portfolio investment recorded a net outflow of US$ 9.8 billion in H1 of 2018-19 as against an inflow of US$ 14.5 billion a year ago.
In H1 of 2018-19, there was a depletion of US$ 13.2 billion of the foreign exchange reserves (on a BoP basis).
| Table 1: Major Items of India's Balance of Payments |
| (US$ Billion) |
| | July-September 2018 P | July-September 2017 | April-September 2018-19P | April-September 2017-18 |
| | Credit | Debit | Net | Credit | Debit | Net | Credit | Debit | Net | Credit | Debit | Net |
| A. Current Account | 160.0 | 179.1 | -19.1 | 145.5 | 152.4 | -6.9 | 315.7 | 350.7 | -35.0 | 285.4 | 307.3 | -21.9 |
| 1. Goods | 83.4 | 133.4 | -50.0 | 76.1 | 108.5 | -32.5 | 166.8 | 262.6 | -95.8 | 149.2 | 223.6 | -74.4 |
| Of which: | | | | | | | | | | | | |
| POL | 12.1 | 35.2 | -23.1 | 9.0 | 23.7 | -14.6 | 23.5 | 69.9 | -46.5 | 16.5 | 46.5 | -30.0 |
| 2. Services | 50.1 | 29.8 | 20.2 | 47.4 | 29.0 | 18.4 | 98.3 | 59.3 | 38.9 | 93.3 | 56.6 | 36.7 |
| 3. Primary Income | 5.6 | 14.3 | -8.7 | 4.5 | 13.0 | -8.6 | 11.0 | 25.5 | -14.6 | 9.2 | 23.6 | -14.4 |
| 4. Secondary Income | 20.9 | 1.5 | 19.4 | 17.5 | 1.8 | 15.7 | 39.7 | 3.3 | 36.4 | 33.7 | 3.5 | 30.2 |
| B. Capital Account and Financial Account | 131.1 | 112.9 | 18.2 | 147.1 | 139.7 | 7.4 | 273.7 | 238.8 | 34.9 | 302.8 | 279.9 | 22.9 |
| Of which: | | | | | | | | | | | | |
| Change in Reserves (Increase (-)/Decrease (+)) | 1.9 | 0.0 | 1.9 | 0.0 | 9.5 | -9.5 | 13.2 | 0.0 | 13.2 | 0.0 | 20.9 | -20.9 |
| C. Errors & Omissions (-) (A+B) | 0.9 | | 0.9 | | 0.4 | -0.4 | 0.1 | | 0.1 | | 1.0 | -1.0 |
| P: Preliminary |
| Note: Total of subcomponents may not tally with aggregate due to rounding off. |
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