India’s Q3FY21 current account deficit at $1.7 bn

India’s current account deficit stood at $1.7 billion in Q3FY21 from a surplus of $15.1 billion reported for the second quarter of the current fiscal.

On a YoY basis, the country’s Balance of Payment status was in a deficit of $2.6 billion during Q2FY20.

“Underlying the current account deficit in Q3:2020-21 was a rise in the merchandise trade deficit to US$34.5 billion from US$14.8 billion in the preceding quarter, and an increase in net investment income payments,” the RBI said in a statement on India’s Q3FY21 BoP.

According to the central bank, net services receipts increased, both sequentially and on a year-on-year basis, primarily on the back of higher net export earnings from computer services.

However, private transfer receipts, mainly representing remittances by Indians employed overseas, declined marginally on a y-o-y basis but improved sequentially by 1.5 per cent to $20.7 billion in Q3:2020-21.

“Net outgo on the primary income account, primarily reflecting payments of investment income, increased to US$ 10.1 billion from US$ 7.4 billion a year ago.”

As per the RBI, in the financial account, net foreign direct investment (FDI) recorded a robust inflow of $17 billion as compared with $9.7 billion in Q3 of 2019-20.

“Net foreign portfolio investment (FPI) was US$21.2 billion as compared with US$7.8 billion in Q3:2019-20, primarily reflecting net purchases by foreign portfolio investors in the equity market.”

“With repayments exceeding fresh disbursals, external commercial borrowings to India recorded net outflow of US$1.7 billion in Q3:2020-21 as against an inflow of US$3.2 billion a year ago.”

Besides the data showed that net accretions to non-resident deposits increased to $3 billion from $0.8 billion during the corresponding period of 2019-20.

“There was an accretion of US$ 32.5 billion to the foreign exchange reserves (on a BoP basis) as compared with that of US$ 21.6 billion in Q3:2019-20.”