India's current account surplus remained in surplus during July-September quarter of the current fiscal on the back of increase in net services receipts due to higher net earnings from computer services. The surplus, however, moderated to $15.5 billion, or 2.4 per cent of the GDP, in Q2 FY21 as compared to $19.2 billion, or 3.8 per cent of GDP, in the April-June quarter of the current fiscal, RBI data showed. India recorded a deficit of $7.6 billion (1.1 per cent of GDP) in the year ago period.
For first half of the current fiscal (April-September period), India recorded a current account surplus of 3.1 per cent of GDP as against a deficit of 1.6 per cent in H1 of FY20 on the back of a sharp contraction in the trade deficit.
This is the third straight quarter when India's current account remained in surplus, largely due to fall in the country's trade deficit in wake of the COVID-19 pandemic and slump in economic activity.
"The current account surplus remained robust in Q2 FY2021, despite the entirely expected moderation from the level recorded in the lockdown quarter, given the rise in imports in tune with the resumption in economic activities," said Aditi Nayar, economist at credit rating agency ICRA.
The shrink in the current account surplus in Q2 FY21 was on account of a rise in the merchandise trade deficit to $14.8 billion from $10.8 billion in the preceding quarter.
As per the RBI data, net services receipts, the profits from particular sales after all costs and taxes have been paid, increased both sequentially and on a year-on-year basis, primarily on the back of higher net earnings from computer services.
Private transfer receipts, mainly representing remittances by Indians employed overseas, declined on a y-o-y basis but improved sequentially by 12 per cent to $20.4 billion in Q2 FY21.
Net outgo from the primary income account, primarily reflecting net overseas investment income payments, increased to $9.3 billion from $8.8 billion a year ago.
In the financial account, net foreign direct investment recorded robust inflow of $24.6 billion as compared with $7.3 billion in Q2 of FY20. Net foreign portfolio investment was $7 billion as compared with $2.5 billion in Q2 of FY20, largely reflecting net purchases in the equity market.
With repayments exceeding fresh disbursals, external commercial borrowings to India recorded net outflow of $4.1 billion in Q2 of FY21 as against an inflow of $3.1 billion a year ago.
For the first half of the current fiscal, net FDI inflows stood at $23.8 billion, higher than $21.3 billion in H1 of FY20. Portfolio investment recorded a net inflow of $7.6 billion in H1 of FY21, almost at the same level as a year ago.