India Data Talk: On September 30, 2011, the Reserve Bank of India (RBI) published India’s balance of payments (BoP) using a new presentation format. The format improves the presentation of India’s BoP by aligning with international best practices. A major part of the BoP report has been compiled based on the IMF’s latest BoP Manual (BPM6) starting from the first quarter of the fiscal year 2010-2011 (April-June 2010), officially replacing the previous BPM5 format.
During the quarter of April-June 2011, the trade deficit rose by 9.7% to USD 35.4 billion, despite a sharp increase in exports relative to imports. Export goods recorded growth of 47.1% year-on-year (YoY), and imports registered a 33.2% YoY growth during the quarter. In absolute terms, the trade deficit increased by USD 3.1 billion from USD 32.3 billion in the corresponding quarter previous year. Meanwhile, net exports of services rose by 19.1% in the quarter, mainly due to higher growth in receipts led by the transportation, construction, insurance and pension, telecommunication, computer and information sectors.
Driven by higher commodity prices, the current account deficit (CAD) widened by 17.4% YoY to USD 14.1 billion during the first quarter of the current fiscal year. This wider CAD was financed by an overall capital and financial accounts surplus in excess of USD 15.4 billion during the same period. Mainly due to increasing net foreign direct investment (FDI) inflows to India, net financial inflows increased 20.4% to USD 15.7 billion in the quarter compared to the previous year. FDI inflows increased to USD 7.2 billion during the first quarter of fiscal year 2011-2012 as compared to USD 2.9 billion last year. There was a net accretion to foreign exchange reserves to the tune of USD 5.4 billion reflecting depreciation of the U.S. dollar against major international currencies during the quarter.
The RBI’s latest presentation of the trade deficit patterns is decomposed into specific current account components with detailed breakdowns on trade of goods, services, and income transfers. In line with current international standards, the new BPM6 classifications enhance India’s BoP statistics with more detail and better cross-country comparisons.
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By Chan Lee Lui – CEIC Analyst
Driven by higher commodity prices, the current account deficit (CAD) widened by 17.4% YoY to USD 14.1 billion during the first quarter of the current fiscal year. This wider CAD was financed by an overall capital and financial accounts surplus in excess of USD 15.4 billion during the same period. Mainly due to increasing net foreign direct investment (FDI) inflows to India, net financial inflows increased 20.4% to USD 15.7 billion in the quarter compared to the previous year. FDI inflows increased to USD 7.2 billion during the first quarter of fiscal year 2011-2012 as compared to USD 2.9 billion last year. There was a net accretion to foreign exchange reserves to the tune of USD 5.4 billion reflecting depreciation of the U.S. dollar against major international currencies during the quarter.
The RBI’s latest presentation of the trade deficit patterns is decomposed into specific current account components with detailed breakdowns on trade of goods, services, and income transfers. In line with current international standards, the new BPM6 classifications enhance India’s BoP statistics with more detail and better cross-country comparisons.
Discuss this post and many other topics in our LinkedIn Group (you must be a LinkedIn member to participate). Request a Free Trial Subscription.
By Chan Lee Lui – CEIC Analyst
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