MUMBAI: India’s current account balance turned in surplus during the three months of April to June, largely due to a shrinking trade deficit, the Reserve Bank of India said on Thursday in a statement.
Analysts, however, predicted that the surplus was unlikely to hold for the full year until March 2022.
The current account surplus stood at $ 6.5 billion, or 0.9% of GDP, compared to $ 19.1 billion in the same quarter a year ago, which was a record. In the previous quarter from January to March, the current account was in deficit by $ 8.1 billion.
“The current account surplus in the first quarter of 2021/22 is mainly due to the contraction of the trade deficit to $ 30.7 billion from $ 41.7 billion in the previous quarter, and to an increase in net service receipts” RBI said in the statement.
India moved to a current account surplus for the first time in more than a decade during the January-March 2020 quarter.
“The strength of the current account depended on strong export performance, driven by strong global growth and a pickup in manufactured shipments,” said Radhika Rao, economist at DBS Bank.
Rao and other economists said it might be difficult to maintain the surplus as high global commodity prices add to import costs and exports could also slow.
For the year as a whole, the current account deficit is still expected to be “at manageable levels below -1% of GDP,” she said.
Indranil Pan, chief economist at Yes Bank, said global growth in the quarter at the end of June “was relatively disproportionate on the high side.”
“I think we will have some moderation and normalization of growth, which also means that the export sector will normalize as well,†Pan said.
RBI said net service revenue increased year over year, driven by the strong performance of net IT and business services exports, while revenue from private transfers, which are mostly remittances through overseas Indians increased by 14.8%.
The country’s balance of payments posted a surplus of $ 31.9 billion in the first quarter of fiscal year 2021/22, compared to a surplus of $ 19.8 billion a year earlier.
Analysts, however, predicted that the surplus was unlikely to hold for the full year until March 2022.
The current account surplus stood at $ 6.5 billion, or 0.9% of GDP, compared to $ 19.1 billion in the same quarter a year ago, which was a record. In the previous quarter from January to March, the current account was in deficit by $ 8.1 billion.
“The current account surplus in the first quarter of 2021/22 is mainly due to the contraction of the trade deficit to $ 30.7 billion from $ 41.7 billion in the previous quarter, and to an increase in net service receipts” RBI said in the statement.
India moved to a current account surplus for the first time in more than a decade during the January-March 2020 quarter.
“The strength of the current account depended on strong export performance, driven by strong global growth and a pickup in manufactured shipments,” said Radhika Rao, economist at DBS Bank.
Rao and other economists said it might be difficult to maintain the surplus as high global commodity prices add to import costs and exports could also slow.
For the year as a whole, the current account deficit is still expected to be “at manageable levels below -1% of GDP,” she said.
Indranil Pan, chief economist at Yes Bank, said global growth in the quarter at the end of June “was relatively disproportionate on the high side.”
“I think we will have some moderation and normalization of growth, which also means that the export sector will normalize as well,†Pan said.
RBI said net service revenue increased year over year, driven by the strong performance of net IT and business services exports, while revenue from private transfers, which are mostly remittances through overseas Indians increased by 14.8%.
The country’s balance of payments posted a surplus of $ 31.9 billion in the first quarter of fiscal year 2021/22, compared to a surplus of $ 19.8 billion a year earlier.
