India registered a current account surplus of $5.7 billion, equivalent to 0.6 per cent of GDP, in the March quarter, the Reserve Bank of India (RBI) announced on Monday. This marks a significant shift from the previous year’s deficit of $1.3 billion (0.2 per cent of GDP) and the deficit of $8.7 billion (1 per cent of GDP) in the December 2023 quarter.
For the fiscal year 2023-24 (FY24), the current account deficit (CAD) narrowed substantially to $23.2 billion, or 0.7 per cent of GDP, compared to $67 billion, or 2 per cent of GDP, in FY23. The data was released by the RBI in its report on Developments in India’s Balance of Payments.
During January-March 2024, the merchandise trade deficit was reported at $50.9 billion, slightly lower than the $52.6 billion recorded a year earlier.
Net services receipts increased to $42.7 billion from $39.1 billion, driven by a 4.1 per cent growth in the sector. This improvement was pivotal in moving the current account into surplus. However, net outgo on the primary income account, primarily reflecting payments of investment income, rose to $14.8 billion from $12.6 billion a year prior.
Private transfer receipts, mainly remittances from Indians working abroad, saw an 11.9 per cent increase to $32 billion in the March quarter. Additionally, non-resident deposits surged to $5.4 billion, up from $3.6 billion in the same period last year.
Net foreign direct investment (FDI) flows were $2 billion in Q4 FY24, down from $6.4 billion a year earlier. In contrast, foreign portfolio investment recorded a net inflow of $11.4 billion during the quarter, compared to a net outflow of $1.7 billion a year ago.
Net inflows under external commercial borrowings were $2.6 billion, up from $1.7 billion.
For FY24, portfolio investment recorded a net inflow of $44.1 billion, a significant reversal from the outflow of $5.2 billion in FY23. Meanwhile, net FDI fell sharply to $9.8 billion from $28 billion the previous fiscal year, the RBI report highlighted.
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