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BALANCE
OF PAYMENT
Shrinking foreign trade
INDIA’s
trade deficit during the first nine months of fiscal 2009-10
on a balance of payments (BoP) basis
was lower at US$ 89.51 bn compared with US$ 98.44 bn during the same
period in fiscal 2008-09. The trade deficit on a BoP basis in Q3 (US$
30.72 billion) was,
however, less than that in Q3 of 2008-09 (US$ 34.04 billion).
This is revealed in e report
(India's Balance of Payments Developments
during the first quarter (October-December) of 2009-10) of the country’s central banking authority
Reserve Bank of India (RBI).
The key features of
India’s BoP that emerged in Q3 of fiscal 2009-10 were:(i)
Exports recorded a growth of 13.2 per cent during Q3 of 2009-10 over the
corresponding quarter of the previous year, after consecutive declines
in the last four quarters.(ii) Imports registered a growth of 2.6 per
cent in Q3 of 2009-10 after recording consecutive declines in the last
three quarters.(iii) Private transfer receipts remained robust during Q3
of 2009-10.(iv) Despite low trade deficit, the current account deficit
was higher at US$ 12.0 billion during Q3 of 2009-10 mainly due to lower
invisibles surplus.(v) The current account deficit during April-December
2009 was higher at US$ 30.3 billion as compared to US$ 27.5 billion
during April-December 2008.(vi) Surplus in capital account increased
sharply to US$ 43.2 billion during April-December 2009 (US$ 5.8 billion
during April-December 2008) mainly on account of large inflows under FDI,
Portfolio investment, NRI deposits and commercial loans.(vii) As the
surplus in capital account exceeded the current account deficit, there
was a net accretion to foreign exchange reserves of US$ 11.3 billion
during April-December 2009 (as against a drawdown of US$ 20.4 billion
during April-December 2008).
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Major Items of India's Balance of Payments
(US$
million)
|
| |
(2007-08) (PR) |
(2008-09) (P) |
April-December (2008-09) (PR) |
April-December (2009-10) (P) |
| Exports |
|
175184 |
150520 |
124473 |
| Imports |
257789 |
294587 |
248967 |
213988 |
| Trade
Balance |
-91626 |
-119403 |
-98446 |
-89515 |
| Invisibles,
net |
74592 |
89587 |
70931 |
59185 |
| Current
Account Balance |
-17034 |
-29817 |
-27516 |
-30330 |
| Capital
Account* |
109198 |
9737 |
7136 |
41630 |
| Change
in Reserves#
(+ indicates increase;- indicates decrease) |
-92164 |
20080 |
20380 |
-11330 |
|
Including errors & omissions; # On BoP basis excluding valuation;
P: Preliminary, PR: Partially revised. R: revised |
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SOURCE: Reserve Bank of India Report |
Invisibles
The decline in invisibles receipts,
which started in the Q4 of 2008-09, continued during Q3 of 2009-10.
Invisibles receipts registered a decline of 3.1 per cent during the
quarter (as against an increase of 5.4 per cent in Q3 of 2008-09) mainly
on account of decline in business, communication and financial services,
and investment income receipts. Although, software exports recorded a
robust growth of 15.3 per cent, services exports as a whole witnessed a
decline of 12.3 per cent during the quarter as against an increase of
11.8 per cent during the corresponding quarter of 2008-09.
Invisible receipts
recorded a decline of 7.7 per cent during April-December 2009, as
compared with an increase of 22.2 per cent in the corresponding period
of the previous year, mainly due to the lower receipts under almost all
components of services coupled with lower investment income receipts.
Invisibles Payments
Invisibles payments recorded a growth of 12.9 per cent during Q3 of
2009-10, as compared with a low growth of 2.4 per cent in Q3 of 2008-09,
mainly led by increase in payments under almost all components of
services.
Invisibles payments
witnessed a positive growth of 3.7 per cent in April-December 2009 (10.4
per cent in April-December 2008) mainly supported by higher business,
communication and financial services, and increase in payments under
investment income account.
Invisibles Balance
Size of invisibles
surplus in Q3 of 2009-10 was, however, lower than Q3 of preceding year.
Therefore, despite low trade deficit, the current account deficit was
higher at US$ 12.0 billion in Q3 of 2009-10 (US$ 11.7 billion in Q3 of
2008-09).
Net invisibles
(invisibles receipts minus invisibles payments) stood at US$ 59.2
billion during April-December 2009 as compared with US$ 70.9 billion
during April-December 2008. At this level, the invisibles surplus
financed 66.1 per cent of trade deficit during April-December 2009 as
against 72.0 per cent during April-December 2008.
Current Account Deficit
Net invisibles
(invisibles receipts minus invisibles payments) stood at US$ 59.2
billion during April-December 2009 as compared with US$ 70.9 billion
during April-December 2008. At this level, the invisibles surplus
financed 66.1 per cent of trade deficit during April-December 2009 as
against 72.0 per cent during April-December 2008.
Net
capital flows at US$ 43.2 billion in April-December 2009 was much higher
as compared with US$ 5.8 billion in April-December 2008 mainly due to
larger inflows under FDI, portfolio investments and NRI deposits
Due to lower outward
FDI, the net FDI (inward FDI minus outward FDI) was higher at US$ 16.5
billion in April-December 2009 as compared with US$ 14.3 billion in
April-December 2008.
Portfolio investment
witnessed large net inflows of US$ 23.6 billion during April-December
2009 as against a net outflow of US$ 11.3 billion in April-December 2008
due to large net FII inflows of US$ 20.5 billion.
Net external
commercial borrowings (ECBs) inflow slowed down to US$ 2.3 billion in
April-December 2009 (US$ 6.9 billion in April-December 2008) mainly due
to increased repayments.
The increase in
foreign exchange reserves on BoP basis (i.e., excluding
valuation) was US$ 11.3 billion in April-December 2009 (as against a
sharp decline in reserves of US$ 20.4 billion in April-December 2008).
[A Press Release on the Sources of Variation in Foreign Exchange
Reserves is separately issued].
The gross disbursements of short-term trade credit was US$ 10.1 billion
during Q1 of 2009-10 almost same in Q1 of 2008-09. The repayments of
short-term trade credits, however, were very high at US$ 13.2 billion in
Q1 of 2009-10 (US$ 7.8 billion in Q1 of 2008-09). As a result, there
were net outflows of US$ 3.1 billion under short-term trade credit
during Q1 of 2009-10 (inflows of US$ 2.4 billion in Q1 of 2008-09)
Banking capital mainly consists of foreign assets and liabilities
of commercial banks. NRI deposits constitute major part of the foreign
liabilities. Banking capital (net), including NRI deposits, were negative
at US$ 3.4 billion during Q1 of 2009-10 as against a
positive net inflow of US$ 2.7 billion during Q1 of 2008-09. Among the
components of banking capital, NRI deposits witnessed higher inflows of
US$ 1.8 billion in Q1 of 2009-10 (net inflows of US$ 0.8 billion in Q1
of 2008-09) reflecting the positive impact of the revisions
in the ceiling interest rate on NRI deposits.
Other capital includes leads and lags in exports, funds held abroad,
advances received pending for issue of shares under FDI and other capital
not included elsewhere (n.i.e.). Other capital recorded net outflows of
US$ 1.6 billion in Q1 of 2009-10.
Balance of Payments (BoP)
Merchandise
Trade
Exports
On a BoP basis, India’s merchandise
exports posted a decline of 17.3 per cent in April-December 2009 (as
against a high growth of 27.5 per cent in the corresponding period of
the previous year).
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INDIA's cumulative value of exports for the first 11 months
of fiscal 2009-10 (April-2009 to February-2010) stood at US $
152983 million (Rs 727345 crore) as against US $ 172379 million (Rs.
774585 crore) registering a negative growth of 11.3 per cent in
Dollar terms and 6.1 per cent in Rupee terms over the same period
last year. Country's cumulative value of imports for the period
April, 2009- February, 2010 was US $ 248401 million (Rs. 1180124
crore) as against US $ 287099 million (Rs. 1289412 crore)
registering a negative growth of 13.5 per cent in Dollar terms and
8.5 per cent in Rupee terms over the same period last year.
Oil
imports during this 11-month period were valued at US$ 73230 million
which was 18.2 per cent lower than the oil imports of US $ 89492
million in the corresponding period last year. Non-oil imports
during April, 2009- February, 2010 were valued at US$ 175171 million
which was 11.4 per cent lower than the level of such imports valued
at US$ 197607 million in April 2008- February,
2009.
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EXPORTS
& IMPORTS
(April-February, FY 2009-10)
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|
|
In $ Million |
In Rs Crore |
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Exports including re-exports |
|
2008-09 |
172379 |
774585 |
|
2009-10 |
152983 |
727345 |
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Growth 2009-10/2008-2009 (percent) |
-11.3 |
-6.1 |
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Imports |
|
2008-09 |
287099 |
1289412 |
|
2009-10 |
248401 |
1180124 |
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Growth 2009-10/2008-2009 (percent) |
-13.5 |
-8.5 |
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Trade Balance |
|
2008-09 |
-114721 |
-514827 |
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2009-10 |
-95418 |
-452779 |
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Figures for 2008-09 are
the latest revised whereas figures for 2009-10 are provisional
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The trade deficit for April 2009- February, 2010 was estimated
at US $ 95418 million which
was lower than the deficit of US $ 114721 million during April
2008 -February, 2009.
Source:
Federal Ministry of Commerce, Government of India
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Imports
Import payments, on a BoP basis, also remained lower
recording a decline of 14.0 per cent during April-December 2009 as
compared with a high growth of 35.6 per cent in the corresponding period
of the previous year.
According to the DGCI&S data, exports declined by 17.3
per cent, and imports growth was negative at 22.0 per cent led by the
decline in both oil imports (a decline of 29.7 per cent) and non-oil
imports (a decline of 18.4 per cent) during April-December 2009.
On a BoP basis, the merchandise trade deficit decreased
to US$ 89.5 billion during April-December 2009 from US$ 98.4 billion in
April-December 2008 mainly on account of both lower oil and non-oil
import payments
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Inflows & Outflows from NRI Deposits
and Local Withdrawals
(In $ million)
|
|
Inflows |
Outflows |
Local Withdrawals |
| 2006-07
(R) |
19914 |
15593 |
13208 |
| 2007-08
(PR) |
29401 |
29222 |
18919 |
| 2008-09
(P) |
37,089 |
32,799 |
20,617 |
| 2008-09
(Q1) (PR) |
9063 |
8249 |
5157 |
| 2009-10
(Q1) (P) |
11172 |
9354 |
5568 |
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P: Preliminary, PR: Partially revised. R: revised
SOURCE: Reserve Bank of India report India's
Balance of Payments Developments during the First Quarter (April-June
2009) of 2009-10
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Variation
in Reserves
During
April-December 2009, there was an accretion to foreign exchange reserves
mainly on account of valuation gains. Also, inflows under foreign
investments, Non-Resident Indian deposits and short-term trade credits
have contributed significantly to the increase in foreign exchange
reserves during April-December 2009.
On balance of
payments basis (i.e.,
excluding valuation effects), the foreign exchange reserves increased by
US$ 11,300 million during April-December 2009 as against a decline of
US$ 20,380 million during April-December 2008. The valuation gains,
reflecting the depreciation of the US dollar against the major
currencies, accounted for US$ 20,185 million during April-December 2009
as compared with a valuation loss of US$ 33,375 million during
April-December 2008. Accordingly, valuation gains during April-December
2009 accounted for 64.1 per cent of the total increase in foreign
exchange reserves.
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* India's fiscal year is from April to
March
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