Balance of Payments

India's current account turned surplus in thirteen years.

Note: Published quarterly by Reserve Bank of India. Updated till January-March 2020 (Published on July 01, 2020).

Recent Data Trend

India's current account balance posted a marginal surplus of USD 0.6 billion (0.1% of GDP) in the Jan-Mar quarter 2020, as against a deficit of USD 4.7 billion in Jan-Mar 2019 and USD 2.6 billion in the previous quarter. It is noteworthy that this is the first quarterly current account surplus since the Jan-Mar quarter of 2007. It is primarily on account of lower trade deficit at USD 35 billion and a rise in net invisible receipts (which includes services, primary and secondary income) at USD 35.6 billion.

The lower trade deficit is a result of the sharp decline in demand at both the national and international levels following the implementation of COVID-19 lockdowns and a fall in global crude oil prices since the beginning of this year.

In the financial account, net foreign direct investment at USD 12 billion was higher than USD 6.4 billion in Jan-March quarter 2019. On the portfolio investment side, there was a net outflow of USD 13.7 billion compared to USD 9.4 billion inflow the same quarter last year on account of money being pulled out from both debt and equity markets. A surplus at both current and capital account has resulted in a forex reserve accretion of USD 18.8 billion in the Jan-Mar quarter 2020.

Generally, a current account surplus is a piece of welcome news; however, in the current scenario, it is a major worry for the Indian economy as it reflects a drop in economic activity. Given that the imports collapsed more than the exports and overall trade balance (services+goods) posted a surplus in the month of April and May, the current account will likely remain in surplus in the June quarter.

Brief Overview

The Balance of Payments (BoP) records all economic transactions between residents of a country and the rest of the world. The BoP account mainly consists of the current account and the capital account.

The current account includes the transaction of goods, services, primary income, and secondary income between the residents and the rest of the world. The current account balance is largely driven by the movement of goods and services.

The capital account comprises credit and debit transactions under non-produced non-financial assets and capital transfers between residents and non-residents. Thus, acquisitions and disposals of non-produced non-financial assets, such as land sold to embassies and sales of leases and licenses, as well as transfers which are capital in nature, are recorded under this account.

RBI publishes the balance of payments data every quarter, in two formats, an old format and a BPM6 format as recommended by the IMF. We have gathered the data starting from April-June 1990 from "the handbook of statistics on Indian economy". The time series BPM6 data in the RBI database starts only in April-June 2011, and it is provisional or partially revised, therefore, we have used data as of old format. The overall balance of payment corresponds to the change in reserves. The change in reserves are denoted by opposite signs in the RBI data, i.e. increase in reserves is denoted by (-) sign and decrease in reserves by (+) sign. In our analysis, to make sure that the data is easy to understand we present the change in reserves as (+) if it has increased and (-) if it has decreased.

For further details visit the official website.

Next Release Date: To be decided.

Balance of Payments- Annual

Note: The  years in the graph represents fiscal year, for instance, the year 2009 represents the period Apr'09-Mar'10