(MENAFN- KNN India)
New Delhi, Jun 25 (KNN) The Reserve bank of India (RBI) reported on Monday that India's current account balance recorded a surplus of USD 5.7 billion in the fourth quarter of fiscal year 2024, compared to a deficit of USD 1.3 billion in the same period last year.
This marks the first current account surplus in ten quarters. Key factors contributing to this turnaround include a decreased merchandise trade deficit, which fell to USD 50.9 billion in Q4 FY24 from USD 52.6 billion a year ago, and growth in services exports by 4.1 per cent year-on-year, driven by software exports, travel, and business services.
Net services receipts also increased to USD 42.7 billion from USD 39.1 billion in the previous year.
Aditi Nayar, Chief Economist, ICRA, commented on the development, noting that the surplus exceeded their expectations and was primarily driven by a narrowing merchandise trade deficit.
Other significant financial indicators for Q4 FY24 include private transfer receipts, mainly remittances, which rose 11.9 per cent year-on-year to USD 32 billion.
Net foreign direct investment decreased to USD 2 billion from USD 6.4 billion a year ago, while foreign portfolio investment recorded an inflow of USD 11.4 billion, compared to an outflow of USD 1.7 billion in Q4 FY23.
External commercial borrowings saw net inflows increase to USD 2.6 billion from USD 1.7 billion, and non-resident deposits' net inflow rose to USD 5.4 billion from USD 3.6 billion.
The quarter also witnessed an accretion of foreign exchange reserves to the tune of USD 30.8 billion, excluding valuation effects.
For the entire fiscal year 2024, India's current account deficit moderated to USD 23.2 billion (0.7 per cent of GDP) from USD 67.0 billion (2 per cent of GDP) in FY23.
This improvement was attributed to higher net invisibles receipts and a robust expansion in the services trade surplus. Net FDI inflow for FY24 was USD 9.8 billion compared with USD 28 billion in FY23, while portfolio investment recorded a net inflow of USD 44.1 billion against an outflow of USD 5.2 billion a year ago.
Overall, there was an accretion of USD 63.7 billion to the foreign exchange reserves on a balance of payment basis in FY24.
Looking ahead, ICRA projects a slight rise in the current account deficit for FY25, estimating it to remain manageable at 1-1.2 per cent of GDP.
This forecast considers potential widening of the merchandise trade deficit due to domestic demand and higher commodity prices, with an assumed average price of the Indian basket of crude oil at USD 85 per barrel.
Despite this projected increase, the financial outlook appears stable, with expectations of significant foreign portfolio investment inflows in debt, particularly due to bond index inclusion starting from the end of June 2024.
(KNN Bureau)
MENAFN25062024000155011030ID1108372310
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.