PUNJABI UNIVERSITY, PATIALA

INTERNATIONAL FINANCIAL MANAGEMENT

ASSIGNMENT

ON

BALANCE OF PAYMENT ANALYSIS

SUBMITTED TO: SUBMITTED BY:

DR. LIAQAT ALI KULMEET KAUR

ROLLNO: 18421181(D)

MBA SEMESTER: 4TH

INTRODUCTION
The balance of payments is considered as the balance of international payments which
presents the record of all economic transactions of a country and with world. These
transactions are mainly generated by companies, residents, and government. The balance
of payments contains the two types of external transactions of a nation. These are:
The visible
The non-visible

This shows the addition of claims of current demand and supply of a nation on the
foreign currencies. This includes the foreign claims on the domestic currency. These
transactions include the payments for import and exports. The payments such as cash,
cash capital, and cash transfers are taken into consideration.
The Sources of funds are the surplus such as receipts of export payments, investments.
The Uses of funds are the negative things such as payment for import in foreign
countries.
BOP is considered as a summarized statement which shows the transactions of a nation
with the world. The balance of payments is regarded as the balance of international
payments that includes all transactions between a nation and foreign consisting the
various claims, product, income, services, transfers and liabilities.
The balance of payments represents these transactions in current accounts and capital
account. The current account contains the transactions in transfers, gain, product and
services. The capital account takes the transactions basically in cash instruments.
The current account shows the net amount which a nation is earning.

Balance of trade = earnings on exports- payments for imports

Current account = balance of trade + factor income + cash transfers.

The capital account includes the net adjustments in the foreign assets.
Current account + capital account + balancing item =0

Visible trade means recording the imports and exports of physical goods. Invisible trade
is the recording of services including the transfer and gain.
BOP surplus=current account surplus + capital account surplus

The present paper intends to analyze the status of balance of payment of India. This has
been done through the analysis of indicators of balance of payments. These are as:
invisible items, current account items and capital account items.
 1. Balance of Payments for January-March (Q4) of 2009-10

The major items of the BoP for the fourth quarter (Q4) of 2009-10 are set out below
in Table 1.

Table 1 : Major Items of India's Balance of Payments

(US$ billion)
Item April-June July-September October- January-
December March
2008- 2009- 2008- 2009-10 2008- 2009- 2008- 2009-
09 10 09 (PR) 09 (PR) 10 (PR) 09 10 (P)
(PR) (PR) (PR) (PR)
1 2 3 4 5 6 7 8 9
1. Exports 57.5 39.2 53.6 43.5 39.4 47.1 38.5 52.4
2. Imports 82.7 64.8 92.8 72.6 73.5 78.1 58.7 83.9
3. Trade Balance (1-2) -25.3 -25.6 -39.1 -29.1 -34.0 -31.1 -20.2 -31.5
4. Invisibles, net 22.0 21.2 26.5 20.4 22.4 18.9 19.0 18.5
5. Current Account Balance -3.3 -4.5 -12.6 -8.8 -11.7 -12.2 -1.2 -13.0
(3+4)
6. Capital Account Balance* 5.5 4.6 7.8 18.2 -6.2 14.0 1.5 15.1
7. Change in Reserves# -2.2 -0.1 4.7 -9.4 17.9 -1.8 -0.3 -2.1
(-Indicates increase;+ indicates
decrease)
*: Including errors and omissions. #: On BoP basis (i.e., excluding valuation).
P: Preliminary. PR: Partially Revised.

i. On a BoP basis, India’s merchandise exports recorded growth of 36.2 per cent in Q4 of
2009-10 as against a decline of 20.0 per cent in Q4 of 2008-09.
ii. On a BoP basis, imports registered growth of 43.0 per cent as against a decline of 20.8
per cent during Q4 of 2008-09.
iii. The trade deficit, on a BoP basis, was higher at US$ 31.5 billion in Q4 of 2009-10 as
compared with US$ 20.2 billion during Q4 of 2008-09.
iv. After witnessing four consecutive quarters of decline, on year-on-year basis, invisibles
receipts recorded a growth of 15.4 per cent during Q4 of 2009-10 (as against a decline of
18.3 per cent during Q4 of 2008-09) mainly led by services and private transfers.
v. Services exports registered a growth of 13.4 per cent (as against a decline of 9.7 per cent
a year ago) led by trade related services such as transportation and insurance as well as
miscellaneous services such as software and financial services.
 vi. Private transfers receipts increased sharply by 33.3 per cent (as against a decline of 31.1
per cent a year ago).
vii. Investment income receipts declined by 23.5 per cent during the quarter mainly due to
persistence of lower interest rates abroad.
viii. Invisibles payments recorded a growth of 34.3 per cent (as against a decline of 20.8 per
cent a year ago) mainly due to higher payments on account of transportation, business
and financial services as well as steady payments under investment income.
ix. As growth in invisibles payments was higher than the growth in receipts, net invisibles
(invisibles receipts minus invisibles payments) recorded a decline of 2.6 per cent to US$
18.5 billion during the quarter. The decline was, however, lower as compared to Q4 of
2008-09, when it had declined by 15.8 per cent to US$ 19.0 billion.
x. The lower size of invisibles surplus coupled with a higher trade deficit resulted in an
increase in current account deficit during Q4 of 2009-10 to US$ 13.0 billion (US$ 1.2
billion during Q4 of 2008-09).
xi. The continued buoyancy in capital inflows, mainly led by large inflows under portfolio
investments and short-term trade credits coupled with foreign direct investments, resulted
in a net capital account surplus of US$ 16.1 billion during Q4 of 2009-10 as compared
with a lower surplus of US$ 1.4 billion during Q4 of 2008-09.
xii. Net FDI flows (net inward FDI minus net outward FDI) amounted to US$ 3.2 billion
during the quarter (almost same as that in Q4 of 2008-09). Net inward FDI stood at US$
5.1 billion during the quarter (US$ 8.0 billion in Q4 of 2008-09). Net outward FDI
remained lower at US$ 1.9 billion (US$ 4.8 billion in Q4 of 2008-09).
xiii. Net portfolio investments were higher at US$ 8.8 billion, mainly supported by strong net
inflows by the foreign institutional investors amounting to US$ 8.5 billion during Q4 of
2009-10 (as against net outflows of US$ 2.6 billion by FIIs in Q4 of 2008-09).
xiv. Net External Commercial Borrowings (ECBs) were relatively low at US$ 0.1 billion
during the quarter (US$ 1.0 billion in Q4 of 2008-09) mainly due to increased
repayments of commercial loans to India. Short-term trade credits to India recorded a net
inflow of US$ 5.0 billion in Q4 of 2009-10 as against a net outflow of US$ 2.6 billion
during Q4 of 2008-09.
xv. Banking capital recorded net outflows at US$ 0.9 billion during the quarter (as compared
with net outflows of US$ 3.3 billion in Q4 of 2008-09) mainly due to build up of foreign
assets of commercial banks.
xvi. There was an increase in foreign exchange reserves on BoP basis (i.e., excluding
valuation) of US$ 2.1 billion in Q4 of 2009-10 as compared with an increase of US$ 0.3
billion in Q4 of 2008-09. In nominal terms (i.e., including valuation changes), foreign
exchange reserves declined by US$ 4.4 billion during the quarter reflecting appreciation
of US dollar against major international currencies during the quarter

Balance of Payments for January-March 2011 (Q4) of 2010-11

 The major items of the BoP for the fourth quarter (Q4) of 2010-11 are set out below
in Table 2.

Table 2: Major Items of India's Balance of Payments

(US $ billion)
Item April-June July-September October- January-
December March
2009- 2010- 2009- 2010-11 2009- 2010-11 2009- 2010-
10 11 10 (PR) 10 (PR) 10 11 (P)
(PR) (PR) (PR) (PR) (PR)
1 2 3 4 5 6 7 8 9
1. Exports 39.2 55.3 43.4 52.0 47.2 65.9 52.5 77.2
2. Imports 65.4 87.2 73.0 89.3 78.1 97.4 84.1 107.1
3. Trade Balance (1-2) -26.3 -31.9 -29.6 -37.3 -30.9 -31.5 -31.6 -29.9
4. Invisibles, net 22.1 19.8 20.4 20.5 18.7 21.5 18.8 24.5
5. Current Account Balance (3+4) -4.2 -12.1 -9.2 -16.8 -12.2 -10.0 -12.8 -5.4
6. Capital Account Balance* 4.3 15.8 18.6 20.1 14.0 14.0 15.0 7.4
7. Change in Reserves#
(-Indicates increase;+ indicates -0.1 -3.7 -9.4 -3.3 -1.8 -4.0 -2.1 -2.0
decrease)
*: Including errors and omissions. #: On BoP basis (i.e., excluding valuation). P: Preliminary. PR:
Partially Revised.
Note: Difference in totaling may be due to rounding off.

Merchandise Trade

During Q4 of 2010-11, growth in merchandise exports picked up significantly while there

has been considerable moderation in growth of merchandise imports.

 On a BoP basis, India’s merchandise exports recorded a growth of 47.1 per cent, year-on-
year, during Q4 of 2010-11 as compared with a growth of 36.4 per cent during
corresponding quarter of 2009-10. Similarly, on a BoP basis, merchandise imports
registered a growth of 27.4 per cent, year-on-year, during the quarter as compared with a
growth of 43.3 per cent during same quarter last year.
 Thus, the trade deficit in absolute terms narrowed down to US$ 29.9 billion as compared
with US$ 31.6 billion during the corresponding quarter of last year.
 Invisibles

Similar to merchandise trade during Q4 of 2010-11, there has been significant pick up in
the growth of invisibles receipts and considerable moderation in growth of invisibles
payments resulting in turnaround in net invisibles compared to Q4 of preceding year.

 Invisibles receipts recorded a growth of 19.7 per cent (as compared with an increase of
13.6 per cent last year) largely driven by services exports.
 Services exports rose by 27.5 per cent (as compared with an increase of 10.8 per cent a
year ago) mainly led by travel, transportation, software, business and financial services.
 Similarly, Private transfer receipts increased by 11.3 per cent to US$ 14.6 billion during
the quarter (US$ 13.1 billion a year ago).
 Investment income receipts, however, declined further by 25.9 per cent during the quarter
(a decline of 23.5 per cent a year ago).
 Invisibles payments recorded a slower growth of 11.7 per cent (as compared with a
growth of 33.8 per cent a year ago) driven by slower growth under services payments.
 Services payments increased by 8.3 per cent during the quarter (48.2 per cent a year ago)
mainly due to travel and miscellaneous services viz., business and financial services.
 Consequently, net invisibles (invisibles receipts minus invisibles payments) increased by
30.4 per cent (as against a decline of 5.4 per cent a year ago) to US$ 24.5 billion.

With higher growth in exports vis-à-vis imports and turnaround in net invisibles, the
current account deficit moderated to US$ 5.4 billion from US$ 12.8 billion a year ago.

Capital Account

The size of overall net capital flows was significantly lower at US$ 8.2 billion during the
quarter (US$ 15.8 billion a year ago) as the higher net inflows under ECBs and NRI
deposits were offset by the moderation in FDI, external assistance and net outflows under
FIIs.

 Net FDI inflows to India (inward FDI minus outward FDI) moderated to US$ 0.6 billion
during Q4 of 2010-11 as compared to US$ 3.4 billion in the corresponding quarter of last
year. Lower net FDI was mainly on account of moderation in the gross FDI inflows and
significant increase in the overseas investment by Indian corporates.
 Net ECBs were significantly higher at US$ 2.4 billion during the quarter (US$ 0.4 billion
last year) reflecting sustained domestic economic activities and favourable interest rate
differentials.
 Despite surge in the inflows under the NRI deposits to the tune of 0.9 billion (as against
an outflow of 0.6 billion a year ago), banking capital of commercial banks recorded a
higher net outflows of US$ 1.8 billion during the quarter (as compared with net outflows
of US$ 0.9 billion a year ago) mainly due to build-up of foreign assets by commercial
banks.
 Although there has been moderation in the current account deficit, lower capital account
surplus led to marginally lower net accretion to foreign exchange reserves of US$ 2.0
billion during the quarter (US$ 2.1 billion a year ago). In nominal terms (i.e., including
valuation changes), foreign exchange reserves increased by US$ 7.5 billion during the
quarter.

BoP during January-March (Q4) of 2011-12

The stress witnessed in India’s BoP in Q3 continued during Q4 of 2011-12 as well due to
large increase in imports. While capital inflows improved reflecting significant increase
in portfolio investment and non-resident deposits, they fell short of financing
requirements, resulting in a drawdown of foreign exchange reserves. The trade deficit
during the fourth quarter exceeded US$ 50 billion (10.6 per cent of GDP) and CAD rose
to US$ 21.7 billion (4.5 per cent of GDP).

 On a BoP basis, growth in merchandise exports (y-o-y) decelerated sharply to 3.4 per
cent during Q4 of 2011-12 from 46.9 per cent during the corresponding quarter of 2010-
11.
 Imports registered a growth of 22.6 per cent during Q4 of 2011-12 as compared with 27.7
per cent in the corresponding quarter of the preceding year.
 With export growth remaining substantially lower than import growth, the trade deficit
widened to US$ 51.6 billion in Q4 of 2011-12 as compared with US$ 30.0 billion in Q4
of 2010-11.
 Growth in net services exports in Q4 of 2011-12 also decelerated to 21.1 per cent as
compared to 72.0 per cent in Q4 of 2010-11.
 As a result of the falling exchange rate, net secondary income (private transfers) receipts
rose significantly by 24.0 per cent (y-o-y) to US$ 16.9 billion in Q4 of 2011-12 as
compared with US$ 13.6 billion in Q4 of 2010-11.
 The primary income account (mainly investment income) showed a net outflow of US$
4.6 billion in Q4 of 2011-12, broadly the same as in the corresponding quarter of the
previous year.
 Consequently, the current account deficit (CAD) widened to US$ 21.7 billion in Q4 of
2011-12 which works out to 4.5 per cent of GDP (US$ 6.3 billion in Q4 of 2010-11 i.e.,
1.3 per cent of GDP).
 Capital and Financial account (excluding change in foreign exchange reserves), on a net
basis, recorded a higher inflow of US$ 16.5 billion in Q4 of 2011-12 as compared with
US$ 9.1 billion in Q4 of 2010-11.
 Despite significant improvement in the capital inflows in Q4 of 2011-12, there was a
drawdown of foreign exchange reserves of US$ 5.7 billion (excluding valuation) as
against an increase of US$ 2.0 billion in the corresponding quarter of 2010-11, mainly
because of the deterioration in the current account.
 Highlights of BoP FY 2011-12

 In 2011-12, the CAD rose to US$ 78.2 billion (4.2 per cent of GDP) from US$ 46.0
billion (2.7 per cent of GDP) in 2010-11, largely reflecting higher trade deficit on account
of subdued external demand and relatively inelastic imports of POL and gold & silver.
 Net inflows under Capital and Financial account (excluding changes in reserve assets)
were higher at US$ 67.8 billion during 2011-12 as compared with US$ 62.0 billion
during 2010-11. However, there was a drawdown of reserves to the extent of US$ 12.8
billion during the year as against an accretion of US$ 13.1 billion in 2010-11.

Balance of Payments for January-March (Q4) of 2011-12

The major items of the BoP for Q4 of 2011-12 and for the full year 2011-12 are set out
in Table 3.

Table 3. :Major items of India's Balance of Payments (US$ Billion)

Fourth Full Year
Quarter April-March
January-
March
2011 2012 2010/11 2011/12
(PR) (P) (PR) (P)
1. Goods exports 77.4 80.0 250.6 309.8
2. Goods Imports 107.4 131.7 381.1 499.5
3. Trade Balance(1-2) -30.0 -51.6 -130.4 -189.7
4. Services Exports 35.3 37.7 131.7 140.9
5. Services Imports 20.7 20.0 83.0 76.9
6. Net Services (4-5) 14.6 17.7 48.7 64.0
7. Goods & Services Balances (3+6) -15.4 -34.0 -81.8 -125.7
8. Primary Income, Net (Compensation of employees
-4.5 -4.6 -17.3 -16.0
and Investment Income)
9. Secondary Income, Net ( Private Transfers) 13.6 16.9 53.1 63.5
10. Net Income (8+9) 9.1 12.3 35.8 47.5
11. Current Account Balance (7+10) -6.3 -21.7 -46.0 -78.2
12. Capital and Financial Account Balance, Net
9.1 16.5 62.0 67.8
(Excl. change in reserves)
13.Change in Reserves (-)increase/(+)decrease -2.0 5.7 -13.1 12.8
14. Errors & Omissions (-)(11+12+13) -0.8 -0.6 -3.0 -2.4
P: Preliminary; PR: Partially Revised
 Highlights of BoP during January-March (Q4) of 2012-13

 India’s current account deficit (CAD) moderated sharply to 3.6 per cent of GDP in Q4 of
2012-13 from a historically high level of 6.7 per cent of GDP in Q3 of 2012-13 as trade
deficit narrowed.
 Merchandise exports (BoP basis) increased by 5.9 per cent in Q4 of 2012-13 as compared
with 2.6 per cent in Q4 of 2011-12.
 Merchandise imports recorded a marginal decline of 1.0 per cent in Q4 of 2012-13 as
against an increase of 22.6 per cent in Q4 of 2011-12. Essentially non-oil non-gold
component of imports showed a decline, reflecting slowdown in domestic economic
activity.
 As a result, trade deficit narrowed to US$ 45.6 billion in Q4 of 2012-13 from US$ 51.6
billion in Q4 of 2011-12.
 Net invisibles, however, recorded a decline of 7.7 per cent in Q4 of 2012-13 as compared
to a growth of 27.5 per cent in Q4 of 2011-12 on account of decline in net services,
transfers and income receipts.
 Net capital inflows under financial account moderated in Q4 of 2012-13 largely due to
slowdown in net portfolio investment and net repayment of loans by banks and corporate.
However, net capital inflows were more than adequate to finance CAD, resulting in
accretion of US$ 2.7 billion to the foreign exchange reserves.

Highlights of BoP during 2012-13

 During 2012-13, CAD stood at US$ 87.8 billion (4.8 per cent of GDP) as against US$
78.2 billion (4.2 per cent of GDP) during 2011-12.
 Burgeoning trade deficit along with significant decline in invisible earnings caused
widening of CAD during the year.
 Decline in invisible earning has essentially been on account of sizeable increase of 21.2
per cent in investment income payments, and only a modest rise in net services receipts in
2012-13.
 The net inflows under financial account during 2012-13 rose to US$ 85.4 billion from
US$ 80.7 billion during the preceding year mainly on account of higher inflows under
FII, non-resident deposits and short term credits and advances.
 The increase in capital inflows led to an accretion to foreign exchange reserves by US$
3.8 billion during 2012-13.
 Balance of Payments for January-March (Q4) of 2012-13

The major items of the BoP for the fourth quarter (Q4) of 2012-13 are set out below in
Table 4.

Goods Trade

 On BoP basis, India’s merchandise exports increased by 5.9 per cent to US$ 84.8 billion
in Q4 of 2012-13 as compared to 2.6 per cent in Q4 of 2011-12. Pickup in exports could
be attributed to better performance of products like tea, leather and manufactures, plastic
and linoleum products, machinery and equipments, cotton yarn fabrics and carpets.
 Merchandise imports witnessed a marginal decline of 1.0 per cent at US$ 130.4 billion in
Q4 of 2012-13 as against a growth of 22.6 per cent in Q4 of 2011-12, resulting mainly
from a decline in non-oil non-gold imports partly reflecting a slowdown in domestic
activity .
 Trade deficit narrowed down to US$ 45.6 billion in Q4 of 2012-13 amounting to 9.0 per
cent of GDP.

Services and Income Flows

Services exports increased by 0.4 per cent to US$ 37.8 billion in Q4 of 2012-13 as
compared to an increase of 6.8 per cent during the same quarter in the preceding year.
Moderation in exports was mainly led by a decline in other business services like
research and development, professional and management consulting, technical and trade
related services.

Table 4: Major Items of India's Balance of Payments

(US$ Billion)
Jan-Mar 2012 Apr-Mar 2012-13 Apr-Mar 2011-12
Jan-Mar 2013 (P)
(PR) (P) (PR)
Credit Debit Net Credit Debit Net Credit Debit Net Credit Debit Net
A. Current Account - -
142.0 160.1 137.7 159.4 530.2 618.1 -87.8 527.0 605.2 -78.2
(1+2+3+4) 18.1 21.7
- - - -
1. Goods 84.8 130.4 80.0 131.7 306.6 502.2 309.8 499.5
45.6 51.6 195.7 189.7
Of which:
- - -
POL 15.8 44.7 13.7 44.0 60.0 169.4 56.0 155.0 -98.9
28.8 30.3 109.4
- -
Gold 1.8* 15.8 1.7* 14.7 6.5* 53.8 -47.3 6.7* 56.5 -49.7
14.0 13.0
2.Services 37.8 20.9 17.0 37.7 20.0 17.6 145.7 80.8 64.9 140.9 76.9 64.0
3. Primary Income 2.6 7.8 -5.2 2.3 6.8 -4.6 10.3 31.7 -21.5 10.1 26.1 -16.0
4. Secondary Income 16.8 1.0 15.8 17.7 0.9 16.9 67.7 3.3 64.4 66.1 2.7 63.5
B. Capital Account 0.6 0.4 0.2 0.1 0.3 -0.2 1.6 1.9 -0.3 0.9 1.0 -0.1
C. Financial Account 133.3 115.7 17.6 131.5 109.1 22.4 472.0 386.5 85.4 497.1 416.4 80.7
D. Errors & Omissions
0.3 -0.6 2.7 -2.4
(A+B-C)
P: Preliminary; PR: Partially Revised *: Estimated
Note: 1. Changes in Reserve Assets are included under the Financial Account as recommended by the BPM 6.
2 Total of subcomponents may not tally with aggregate due to rounding off.

 Import of services grew at a faster rate of 4.2 per cent at US$ 20.9 billion in Q4 of 2012-
13 as against a decline of 4.1 per cent in Q4 of 2011-12 on account of higher payments
towards construction, telecommunication and other business services.
 Overall, net service receipts recorded a decline of 3.9 per cent in Q4 of 2012-13 over the
corresponding quarter of 2011-12.

India’s BoP during January-March 2014

 India’s current account deficit (CAD) narrowed sharply to US$ 1.2 billion (0.2 per cent
of GDP) in Q4 of 2013-14 from US$ 18.1 billion (3.6 per cent of GDP) in Q4 of 2012-13
which was also lower than US$ 4.2 billion (0.9 per cent of GDP) in Q3 of 2013-14. The
lower CAD was primarily on account of a decline in the trade deficit as decline in
imports was sharper than that in exports.
 On a BoP basis, merchandise exports declined by 1.3 per cent to US$ 83.7 billion in Q4
of 2013-14 as against an increase of 5.9 per cent in Q4 of 2012-13.
 On the other hand, declining trend in merchandise imports (on BoP basis) continued in
Q4 of 2013-14. Imports at US$ 114.3 billion moderated by 12.3 per cent in Q4 of 2013-
14 as compared with a decline of 1.0 per cent in Q4 of 2012-13. Decline in imports was
primarily led by a steep decline in gold imports, which amounted to US$ 5.3 billion,
significantly lower than US$ 15.8 billion in Q4 of 2012-13.
 As a result, the merchandise trade deficit (BoP basis) contracted by about 33 per cent to
US$ 30.7 billion in Q4 of 2013-14 from US$ 45.6 billion in the corresponding quarter a
year ago.
 Net services receipts improved during Q4 of 2013-14 on account of higher exports of
services. Net services at US$ 19.6 billion recorded a growth of 15.6 per cent in Q4 of
2013-14 as against a decline of 3.9 per cent in Q4 of 2012-13.
 Net outflow on account of primary income (profit, dividend and interest) amounting to
US$ 6.4 billion in Q4 of 2013-14 was higher than that of US$ 5.2 billion in the
corresponding quarter of 2012-13 as well as the preceding quarter (US$ 5.4 billion). In
Q4 of 2013-14, gross private transfer receipts at US$ 17.3 billion also improved by 3.0
per cent over the corresponding quarter of 2012-13.
  In the financial account, on net basis, both foreign direct investment and portfolio
investment recorded inflows in Q4 of 2013-14. While net inflow on account of portfolio
investment was US$ 9.3 billion, net FDI flow was lower at US$ 0.9 billion.
 ‘Loans’(net) availed by deposit taking corporations (commercial banks) witnessed an
outflow of US$ 5.7 billion in Q4 of 2013-14 owing to repayments of overseas borrowings
and a build-up of their overseas foreign currency assets. Under ‘currency & deposits’, net
inflows of NRI deposits amounted to US$ 3.7 billion in Q4 of 2013-14 as compared to
US$ 2.8 billion in Q4 of 2012-13. Loans (net) availed by other sectors (i.e., external
commercial borrowings) at US$ 4.9 billion also showed an increase of 19.4 per cent over
Q4 of 2012-13. Net trade credits and advances, however, continued to show outflow in
Q4 of 2013-14 as repayments remained higher than disbursements.
 On a BoP basis, there was a net accretion of US$ 7.1 billion to India’s foreign exchange
reserves in Q4 of 2013-14 as compared with US$ 19.1 billion in the preceding quarter .

Developments in India’s BoP during 2013-14

 Export recovery and moderation in imports led to a sharp improvement in the trade
deficit to US$ 147.6 billion in 2013-14 from US$ 195.7 billion in 2012-13.
 Contraction in the trade deficit, coupled with a rise in net invisibles receipts, resulted in a
reduction of the CAD to US$ 32.4 billion (1.7 per cent of GDP) from US$ 87.8 billion
(4.7 per cent of GDP) in 2012-13.
 Net inflows under the capital and financial account (excluding change in foreign
exchange reserves) declined to US$ 48.8 billion in 2013-14 from US$ 89.0 billion in
corresponding period of 2012-13 owing to lower net FDI and portfolio flows, net
repayment of loans and trade credit & advances.
 On BoP basis, foreign exchange reserves increased by US$ 15.5 billion during 2013-14
as compared with US$ 3.8 billion in 2012-13.

Table 5: Major Items of India's Balance of Payments

(US$ Billion)
Jan-Mar 2013
Jan-Mar 2014 (P) 2013-14 (P) 2012-13 (PR)
(PR)
Credit Debit Net Credit Debit Net Credit Debit Net Credit Debit Net
-
A Current Account 144.4 145.6 -1.2 142.0 160.1 551.4 583.7 -32.4 530.2 618.1 -87.8
18.1
- - - -
1. Goods 83.7 114.3 84.8 130.4 318.6 466.2 306.6 502.2
30.7 45.6 147.6 195.7
Of which:
- - - -
POL 14.8 42.7 16.1 42.2 62.7 165.2 60.9 164.0
27.9 26.1 102.5 103.2
2.Services 40.6 21.0 19.6 37.8 20.9 17.0 151.5 78.5 73.0 145.7 80.8 64.9
3. Primary Income 2.8 9.2 -6.4 2.6 7.8 -5.2 11.4 34.4 -23.0 10.3 31.7 -21.5
4. Secondary Income 17.3 1.0 16.3 16.8 1.0 15.8 69.9 4.6 65.3 67.7 3.3 64.4
B. Capital Account
and Financial 127.1 125.1 2.0 133.9 116.1 17.8 523.2 490.0 33.3 473.5 388.4 85.2
Account
Of which:
Change in Reserve
(increase (-) 0.0 7.1 -7.1 0.0 2.7 -2.7 0.0 15.5 -15.5 0.0 3.8 -3.8
/Decrease (+))
C. Errors &
-0.8 0.3 -0.9 2.7
Omissions (-)(A+B)
P: Preliminary; PR: Partially Revised
Note: Total of subcomponents may not tally with aggregate due to rounding off.

Balance of payment of 2014-15

Key Features of India’s BoP in Q4 2014-15

 On a quarter-over-quarter (q-o-q) basis, India’s current account deficit (CAD) narrowed

sharply to US$ 1.3 billion (0.2 per cent of GDP) in Q4 of 2014-15 from US$ 8.3 billion
(1.6 per cent of GDP) in Q3; on a year-on-year (y-o-y) basis, however, the CAD was a
shade higher (US$ 1.2 billion or 0.2 per cent of GDP in Q4 of 2013-14).
 The merchandise trade deficit (US$ 31.7 billion during Q4 2014-15) contracted sharply
on a q-o-q basis on account of a larger decline in merchandise imports (13.4 per cent)
than in merchandise exports (10.4 per cent); however, in terms of y-o-y changes, the
trade deficit in Q4 2014-15 widened marginally as exports registered a larger decline
(15.4 per cent), than imports (10.4 per cent).
 The reduction in the CAD in Q4 2014-15 was primarily on account of lower trade deficit
as net earnings through services and primary income (profit, dividend & interest)
witnessed a decline in q-o-q terms albeit secondary income recorded a marginal increase
of 0.4 per cent.
 Gross private transfer receipts, representing remittances by Indians employed overseas
amounted to US$ 17.5, witnessing a marginal increase of 0.4 per cent on q-o-q basis and
an increase of 1.2 per cent from the level a year ago.
 In the financial account, net inflows of foreign direct and portfolio investment were
higher on a q-o-q basis, though net loans availed by banks witnessed an outflow US$ 3.5
billion mainly on account of increase in balances of foreign currency assets held abroad
by banks.
 During Q4 of 2014-15, on a BoP basis, there was highest ever net accretion of US$ 30.1
billion to India’s foreign exchange reserves in a single quarter; it was more than double
the accretion in the preceding quarter and almost four times of the reserves accrued in Q4
of 2013-14 signifying record increase in capital inflows and dip in current account deficit.
 BoP during April-March 2015

 On a cumulative basis, the overall BoP during 2014-15 showed improvement over the
preceding year. Lower CAD, on the back of contraction in trade deficit and marginal
improvement in the net invisible earnings, along with a sizable increase in net financial
flows enabled a large build-up of reserves.

 India’s trade deficit narrowed to US$ 144.2 billion in 2014-15 from US$ 147.6 billion in
2013-14. With modest increase in invisibles supported by some improvement in net
services receipts, the CAD tracked the trade deficit and shrank to US$ 27.5 billion in
2014-15 (1.3 per cent of GDP) from US$ 32.4 billion (1.7 per cent of GDP) a year ago.

 Net inflows under the capital and financial account (excluding change in foreign
exchange reserves) rose to US$ 89.5 billion during 2014-15 from US$ 48.7 billion in the
previous year.
 There was an accretion to India’s foreign exchange reserves to the tune of US$ 61.4
billion in 2014-15 as compared with US$ 15.5 billion in 2013-14.
 At the end of March 2015, the level of foreign exchange reserves stood at US$ 341.6
billion.

Table 6: Major Items of India's Balance of Payments

(US$ Billion)
Jan-Mar 2015 Jan-Mar 2014 Apr-Mar 2014-15 Apr-Mar 2013-14
(P) (PR) (P) (PR)
Credi Debi Credi Debi Credi Debi Credi Debi
Net Net Net Net
t t t t t t t t
A.
Current 131.4 132.7 -1.3 144.4 145.6 -1.2 553.7 581.2 -27.5 551.4 583.7 -32.4
Account
- - - -
1. Goods 70.8 102.5 31. 83.7 114.3 30. 316.7 460.9 144. 318.6 466.2 147.
7 7 2 6
Of
which:
- - -
POL 7.7 21.8 14. 15.1 42.6 27. 55.2 138.3 -83.1 63.2 164.8 101.
1 4 6
2. 19. 19.
39.8 20.4 40.6 21.0 155.4 79.8 75.7 151.5 78.5 73.0
Services 4 6
3.
Primary 3.2 8.8 -5.6 2.8 9.2 -6.4 11.5 36.5 -25.0 11.4 34.4 -23.0
Income
 4.
16. 16.
Secondar 17.5 0.9 17.3 1.0 70.0 4.0 66.0 69.9 4.6 65.3
6 3
y Income
B. Capital
Account
and 149.2 148.9 0.3 127.1 125.1 2.0 548.4 520.3 28.1 523.2 490.0 33.2
Financial
Account
Of which:
Change in
Reserve
-
(Increase
0.0 30.1 30. 0.0 7.1 -7.1 0.0 61.4 -61.4 0.0 15.5 -15.5
(-
1
)/Decreas
e (+))
C. Errors
&
Omission 1.0 1.0 0.7 -0.7 0.6 -0.6 0.9 -0.9
s (-)
(A+B)
P: Preliminary; PR: Partially Revised
Note: Total of subcomponents may not tally with aggregate due to rounding off.

Balance of payment of 2015-16

Key Features of India’s BoP in Q4 of 2015-16

 India’s current account deficit (CAD) narrowed sharply to US$ 0.3 billion (0.1 per cent
of GDP) in Q4 of 2015-16, significantly lower than US$ 7.1 billion (1.3 per cent of GDP)
in Q3 of 2015-16 and marginally lower than US$ 0.7 billion (0.1 per cent of GDP) in Q4
of 2014-15 .
 The contraction in CAD was primarily on account of a lower trade deficit (US$ 24.8
billion) than in Q4 of last year (US$ 31.6 billion) and US$ 34.0 billion in the preceding
quarter.
 Net services receipts declined on a y-o-y basis largely due to fall in exports of transport,
financial services and telecommunication, computer and information services.
 Private transfer receipts, mainly representing remittances by Indians employed overseas,
amounted to US$ 15.7 billion, a decline from their level in the preceding quarter as well
as from a year ago.
 Net foreign direct investment moderated to US$ 8.8 billion in Q4 of 2015-16 from US$
9.3 billion in Q4 of 2014-15.
 Portfolio investment recorded a net outflow of US$ 1.5 billion in Q4 of 2015-16 as
against a net inflow of US$ 12.5 billion in the corresponding period of last year;
primarily reflecting net outflow in the debt segment.
 Non-resident Indian (NRI) deposits, however, increased in Q4 of 2015-16 over their level
in Q4 last year as well as the preceding quarter.
 Foreign exchange reserves (on a BoP basis) increased by US$ 3.3 billion in Q4 of 2015-
16.

BoP during April-March 2015-16

 The CAD narrowed to 1.1 per cent of GDP in 2015-16 from 1.3 per cent in 2014-15, on
the back of contraction in the trade deficit.
 India’s trade deficit narrowed to US$ 130.1 billion in 2015-16 from US$ 144.9 billion in
2014-15.
 Net invisible receipts declined in 2015-16, primarily reflecting moderation in both net
services earnings and private transfer receipts.
 Net FDI inflows during 2015-16 (US$ 36.0 billion) rose sharply by 15.3 per cent over the
level in 2014-15.
 Portfolio investment, however, recorded a net outflow US$ 4.5 billion in 2015-16 as
against a net inflow of US$ 40.9 billion last year.
 In 2015-16, there was an accretion of US$ 17.9 billion to foreign exchange reserves (on a
BoP basis) as compared with US$ 61.4 billion in 2014-15.

Table 7: Major Items of India's Balance of Payments

(US$ Billion)
January-March January-March April-March April-March
2016 P 2015 PR 2015-16 P 2014-15 PR
Credi Debi Credi Debi Credi Debi Credi Debi
Net Net Net Net
t t t t t t t t
A.
Current 124.7 125.0 -0.3 134.2 134.9 -0.7 501.4 523.5 -22.1 558.2 585.0 -26.8
Account
- - - -
1. Goods 65.8 90.6 24. 71.8 103.4 31. 266.4 396.4 130. 316.5 461.5 144.
8 6 1 9
Of
which:
-
6.1 14.6 -8.5 8.2 21.8 13. 30.4 82.9 -52.4 56.8 138.3 -81.5
POL
5
2. 39.4 23.3 16. 41.4 21.3 20. 154.3 84.6 69.7 158.1 81.6 76.5
 Services 1 0
3.
Primary 3.7 10.3 -6.6 3.5 9.1 -5.6 14.7 39.1 -24.4 13.4 37.5 -24.1
Income
4.
15. 16.
Secondar 15.7 0.7 17.5 1.1 66.0 3.3 62.7 70.1 4.4 65.8
0 4
y Income
B. Capital
Account
and 127.3 127.2 0.2 149.4 149.5 -0.1 510.9 487.8 23.2 550.9 523.1 27.8
Financial
Account
Of
which:
Change in
Reserve
-
(Increase
0.0 3.3 -3.3 0.0 30.1 30. 0.9 18.8 -17.9 0.0 61.4 -61.4
(-
1
)/Decreas
e (+))
C. Errors
&
Omission 0.2 0.0 0.2 0.8 0.0 0.8 0.4 1.5 -1.1 1.1 2.1 -1.0
s (-)
(A+B)
P: Preliminary PR: Partially Revised
Note: Total of sub-components may not tally with aggregate due to rounding off.

Balance of payment of 2017-18

Key Features of India’s BoP in Q4 of 2017-18

 India’s current account deficit (CAD) at US$ 13.0 billion (1.9 per cent of GDP) in Q4 of
2017-18 increased from US$ 2.6 billion (0.4 per cent of GDP) in Q4 of 2016 -17, but
moderated marginally from US$ 13.7 billion (2.1 per cent of GDP) in the preceding
quarter.
 The widening of the CAD on a year-on-year (y-o-y) basis was primarily on account of a
higher trade deficit (US$ 41.6 billion) brought about by a larger increase in merchandise
imports relative to exports.
 Net services receipts increased by 8.8 per cent on a y-o-y basis mainly on the back of a
rise in net earnings from software services and other business services.
 Private transfer receipts, mainly representing remittances by Indians employed overseas,
amounted to US$ 18.1 billion, increasing by 15.1 per cent from their level a year ago.
 In the financial account, net foreign direct investment at US$ 6.4 billion in Q4 of 2017-18
was higher than US$ 5.0 billion in Q4 of 2016-17.
 Portfolio investment recorded net inflow of US$ 2.3 billion in Q4 of 2017-18 – as
compared with an inflow of US$ 10.8 billion in Q4 last year – on account of moderation
in net purchases in both the debt and equity markets.
 Net receipts on account of non-resident deposits amounted to US$ 4.6 billion in Q4 of
2017-18 as compared with US$ 2.7 billion a year ago.
 In Q4 of 2017-18, there was an accretion of US$ 13.2 billion to the foreign exchange
reserves (on BoP basis) as compared with an accretion of US$ 7.3 billion in Q4 of 2016-
17 .

BoP during 2017-18

 For the full year, the CAD increased to 1.9 per cent of GDP in 2017-18 from 0.6 per cent
in 2016-17 on the back of a widening of the trade deficit.
 India’s trade deficit increased to US$ 160.0 billion in 2017-18 from US$ 112.4 billion in
2016-17.
 Net invisible receipts were higher in 2017-18 mainly due to increase in net services
earnings and private transfer receipts.
 Gross FDI inflows to India increased to US$ 61.0 billion in 2017-18 from US$ 60.2
billion in 2016-17.
 Net FDI inflows in 2017-18 moderated to US$ 30.3 billion from US$ 35.6 billion in
2016-17.
 Portfolio investment recorded a net inflow of US$ 22.1 billion in 2017-18 as compared
with US$ 7.6 billion a year ago.
 In 2017-18, there was an accretion of US$ 43.6 billion to the foreign exchange reserves
(on a BoP basis).

Table 7: Major Items of India's Balance of Payments

(US$ Billion)
January-March January-March
2017-18 P 2016-17 PR
2018 P 2017 PR
Credi Debi Credi Debi Credi Debi Credi Debi
Net Net Net Net
t t t t t t t t
A. -
Current 156.7 169.7 13. 139.4 141.9 -2.6 592.4 641.0 -48.7 522.2 536.5 -14.4
Account 0
 - - - -
1. Goods 82.2 123.8 41. 77.4 107.1 29. 309.0 469.0 160. 280.1 392.6 112.
6 7 0 4
Of
which:
- -
POL 10.6 33.0 22. 9.0 25.6 16. 37.5 108.6 -71.1 31.5 87.0 -55.4
4 6
2. 20. 18.
51.6 31.4 41.8 23.3 195.1 117.5 77.6 164.2 95.9 68.3
Services 2 5
3.
Primary 4.8 12.6 -7.8 4.5 10.0 -5.6 18.9 47.5 -28.7 16.3 42.6 -26.3
Income
4.
16. 14.
Secondar 18.1 1.9 15.7 1.5 69.4 6.9 62.5 61.5 5.5 56.0
2 2
y Income
B. Capital
Account
11.
and 171.5 159.7 145.1 142.1 3.0 643.6 595.9 47.8 551.9 537.1 14.8
8
Financial
Account
Of which:
Change in
Reserve
-
(Increase
0.0 13.2 13. 0.0 7.3 -7.3 0.0 43.6 -43.6 0.0 21.6 -21.6
(-
2
)/Decreas
e (+))
C. Errors
&
Omission 1.3 1.3 0.5 -0.5 0.9 0.9 0.5 -0.5
s (-)
(A+B)
P: Preliminary; PR: Partially Revised
Note: Total of subcomponents may not tally with the aggregate due to rounding off.
 Balance of payment of 2018-19

Key Features of India’s BoP in Q4 of 2018-19

India’s current account deficit (CAD) at US$ 4.6 billion (0.7 per cent of GDP) in Q4

 of 2018-19 narrowed from US$ 13.0 billion (1.8 per cent of GDP) in Q4 of 2017-18
and US$ 17.7 billion (2.7 per cent of GDP) in the preceding quarter.
 The contraction of the CAD on a year-on-year (y-o-y) basis was primarily on account
of a lower trade deficit at US$ 35.2 billion as compared with US$ 41.6 billion a year
ago.
 Net services receipts increased by 5.8 per cent on a y-o-y basis mainly on the back of
a rise in net earnings from telecommunications, computer and information services.
 Private transfer receipts, mainly representing remittances by Indians employed
overseas, at US$ 17.9 billion declined by 0.9 per cent from their level a year ago.
 In the financial account, net foreign direct investment at US$ 6.4 billion in Q4 of
2018-19 remained at the same level as in Q4 of 2017-18.
 Foreign portfolio investment recorded net inflow of US$ 9.4 billion in Q4 of 2018-19
– as compared with US$ 2.3 billion in Q4 a year ago – on account of net purchases in
both debt and equity market.
 Net inflow on account of external commercial borrowings to India increased to US$
7.2 billion in Q4 of 2018-19 from US$ 1.0 billion a year ago.
 In Q4 of 2018-19, there was an accretion of US$ 14.2 billion to the foreign exchange
reserves (on BoP basis) as compared with US$ 13.2 billion in Q4 of 2017-18 (Table 8

BoP during 2018-19

 The CAD increased to 2.1 per cent of GDP in 2018-19 from 1.8 per cent in 2017-
18 on the back of widening of the trade deficit.
 India’s trade deficit increased to US$ 180.3 billion in 2018-19 from US$ 160.0
billion in 2017-18.
 Net invisible receipts were higher in 2018-19 mainly due to increase in net
services earnings and private transfer receipts.
 Net FDI inflows at US$ 30.7 billion in 2018-19 were marginally higher than US$
30.3 billion in 2017-18.
 Portfolio investment recorded a net outflow of US$ 2.4 billion in 2018-19 as
against an inflow of US$ 22.1 billion a year ago.
 In 2018-19, there was a depletion of US$ 3.3 billion of the foreign exchange
reserves (on a BoP basis).
 Balance of payment of 2018

Key Features of India’s BoP in Q3 of 2018-19

 India’s current account deficit (CAD) at US$ 16.9 billion (2.5 per cent of GDP) in
Q3 of 2018-19 increased from US$ 13.7 billion (2.1 per cent of GDP) in Q3 of
2017-18, but moderated from US$ 19.1 billion (2.9 per cent of GDP) in the
preceding quarter.
 The widening of the CAD on a year-on-year (y-o-y) basis was primarily on
account of a higher trade deficit at US$ 49.5 billion as compared with US$ 44.0
billion a year ago.
 Net services receipts increased by 2.8 per cent on a y-o-y basis mainly on the back
of a rise in net earnings from telecommunications, computer and information
services and financial services.
 Private transfer receipts, mainly representing remittances by Indians employed
overseas, amounted to US$ 18.7 billion, increasing by 6.3 per cent from their level
a year ago.
 In the financial account, net foreign direct investment at US$ 7.5 billion in Q3 of
2018-19 increased from US$ 4.3 billion in Q3 of 2017-18.
 Portfolio investment recorded net outflow of US$ 2.1 billion in Q3 of 2018-19 –
as compared with an inflow of US$ 5.3 billion in Q3 last year – on account of net
sale in the equity market.
 Net inflow on account of external commercial borrowings increased to US$ 2.0
billion in Q3 of 2018-19 from US$ 0.3 billion a year ago.
 In Q3 of 2018-19, there was a depletion of US$ 4.3 billion of the foreign exchange
reserves (on BoP basis) as against an accretion of US$ 9.4 billion in Q3 of 2017-
18.

BoP during April-December 2018

 The CAD increased to 2.6 per cent of GDP during April-December 2018 from 1.8
per cent April-December 2017 on the back of widening of the trade deficit.
 India’s trade deficit increased to US$ 145.3 billion in April-December 2018 from
US$ 118.4 billion in April-December 2017.
 Net invisible receipts were higher in April-December 2018 mainly due to increase
in net services earnings and private transfer receipts.
 Net FDI inflows in April-December 2018 increased to US$ 24.8 billion from US$
23.9 billion in April-December 2017.
  Portfolio investment recorded a net outflow of US$ 11.9 billion in April-
December 2018 as against an inflow of US$ 19.8 billion a year ago.

Table 9: Major Items of India's Balance of Payments

(US$ Billion)
October-
October- April-December April-December
December 2018
December 2017 2018-19 P 2017-18
P
Credi Debi Credi Debi Credi Debi Credi Debi
Net Net Net Net
t t t t t t t t
A. - -
181. 164. 532. 471.
Current 164.4 16. 150.2 13. 480.2 -51.8 435.7 -35.6
3 0 0 3
Account 9 7
- - - -
132. 121. 395. 345.
1. Goods 83.1 49. 77.5 44. 249.9 145. 226.8 118.
6 6 1 2
5 0 3 4
Of
which:
- -
108.
14.0 38.5 24. 10.4 29.2 18. 37.9 -70.5 26.9 75.7 -48.8
POL 5
5 8
2. 21. 20.
55.2 34.0 50.2 29.5 153.5 93.3 60.3 143.5 86.1 57.4
Services 3 7
3.
Primary 7.3 13.3 -6.0 4.8 11.3 -6.5 18.3 38.7 -20.5 14.1 34.9 -20.9
Income
4.
17. 16.
Secondar 18.8 1.5 17.7 1.6 58.5 4.8 53.7 51.3 5.1 46.3
3 1
y Income
B. Capital 126.8 108. 17. 169.3 156. 13. 400.9 348. 52.7 472.1 436. 36.0
Account 9 9 3 1 2 1
and
Financial
Account
Of
which:
Change
in
Reserves
[(Increase 4.3 0.0 4.3 0.0 9.4 -9.4 17.5 0.0 17.5 0.0 30.3 -30.3
(-
)/Decreas
e (+)]
C. Errors
&
Omission 1.0 -1.0 0.6 0.6 0.9 -0.9 0.4 -0.4
s (-)
(A+B)
P: Preliminary
Note: Total of subcomponents may not tally with aggregate due to rounding off.