If we look at India’s current account balance, it logged a staggering surplus in the January-March quarter. And as per the central bank, this is due to the higher service exports and private transfer receipts.
In the fourth quarter of the fiscal year 2023-24, the current account surplus stood at USD 5.7 billion which is 0.6 percent of the GDP. The Reserve Bank of India (RBI) said in a statement that this is positive if we compare it with a deficit of USD 8.7 billion or 1 percent of the GDP in the preceding quarter. Also, a year earlier, the deficit stood at USD 1.3 billion or 0.2 percent of GDP.
Taking 0.7 per cent of the GDP, the deficit moderated to $23.2 billion from $67 billion, or 2 percent of the GDP for the full fiscal year.
The RBI highlighted, "Services exports grew by 4.1 per cent on a year-on-year basis in the fiscal fourth quarter on the back of rising exports of software, travel and business services.”
Net services receipts were at USD 42.7 billion which was higher than the USD 39.1 billion that was recorded a year earlier. Hence, this contributed to the surplus as per the RBI. Furthermore, from $52.6 billion a year earlier, merchandise trade deficit narrowed down to USD 50.9 billion in the quarter. The merchandise trade deficit in May also stood at USD 23.78 billion if we compare it with USD 19.1 billion in April.
Private transfer receipts increased 11.9 percent on-year to USD 32 billion which are mainly remittances by Indians employed overseas. And if we have to go by the early trends, India's current account deficit (CAD) should be "manageable" at 1-1.5 percent of the Gross Domestic Product in the fiscal year 2024-25. While steady capital inflows should ensure that the balance of payments that showcases the fundamentals remain comfortable as per Madan Sabnavis, Chief Economist at Bank of Baroda.
