Merchandise Trade Deficit In Q4:2023-24 Lower Than A Year Ago

Developments in India’s Balance of Payments during the Fourth Quarter (January-March) of 2023-24

FinTech BizNews Service

Mumbai, June 24, 2024: Preliminary data analysis on India’s balance of payments (BoP) for the fourth quarter (Q4), i.e., January-March 2023-24, are presented here: 

Key Features of India’s BoP in Q4:2023-24

• India’s current account balance recorded a surplus of US$ 5.7 billion (0.6 per cent of GDP) in Q4:2023-24 as against a deficit of US$ 8.7 billion (1.0 per cent of GDP) in Q3:2023-241 and US$ 1.3 billion (0.2 per cent of GDP) a year ago [i.e., Q4:2022-23]2.
• The merchandise trade deficit at US$ 50.9 billion in Q4:2023-24 was lower than US$ 52.6 billion a year ago.
• Services exports grew by 4.1 per cent on a y-o-y basis in Q4:2023-24 on the back of rising exports of software, travel and business services. Net services receipt at US$ 42.7 billion was higher than its level a year ago (US$ 39.1 billion), which contributed to the surplus in the current account balance during Q4:2023-24.
• Net outgo on the primary income account, primarily reflecting payments of investment income, increased to US$ 14.8 billion from US$ 12.6 billion a year ago.
• Private transfer receipts, mainly representing remittances by Indians employed overseas, amounted to US$ 32.0 billion, an increase of 11.9 per cent over their level a year ago.
• In the financial account, net foreign direct investment flows were US$ 2.0 billion in Q4:2023-24 as compared with US$ 6.4 billion a year ago.
• Foreign portfolio investment recorded a net inflow of US$ 11.4 billion in Q4:2023-24 as against a net outflow of US$ 1.7 billion during Q4:2022-23.
• Net inflows under external commercial borrowings to India amounted to US$ 2.6 billion in Q4:2023-24 as compared with US$ 1.7 billion a year ago.
• Non-resident deposits recorded a higher net inflow of US$ 5.4 billion than US$ 3.6 billion in Q4:2022-23.
• There was an accretion of foreign exchange reserves (on a BoP basis i.e., excluding valuation effects) to the tune of US$ 30.8 billion in Q4:2023-24 as compared with an accretion of US$ 5.6 billion a year ago.

BoP during 2023-24

• India’s current account deficit moderated to US$ 23.2 billion (0.7 per cent of GDP) during 2023-24 from US$ 67.0 billion (2.0 per cent of GDP) during the previous year on the back of a lower merchandise trade deficit.
• Net invisibles receipt was higher during 2023-24 than a year ago, primarily on account of services and transfers.
• During 2023-24, portfolio investment recorded a net inflow of US$ 44.1 billion as against an outflow of US$ 5.2 billion a year ago.
• Net FDI inflow was US$ 9.8 billion during 2023-24 as compared with US$ 28.0 billion in 2022-23.
• In 2023-24, there was an accretion of US$ 63.7 billion to the foreign exchange reserves (on a BoP basis).