Driven by a surge in remittances by expatriates and software exports, India's balance of payments saw a surplus of $1.90 billion on current account for the first quarter ending June 2004 as against a deficit of $637 million in the same period last year.
The trade deficit during April-June 2004 of $6.27 billion was the highest for any quarter so far. For Q1 of 2003-04, it was $5.56 billion. Net invisibles showed a gain of 65.91 per cent at $8.17 billion ($4.92 billion), according to data released by Reserve Bank of India in Mumbai on Thursday.
Exports during Q1 grew by 28.08 per cent to $16.84 billion (in Q1 of FY-04 $13.15 bn) while imports were higher by 23.51 per cent at $23.11 billion ($18.71 billion).
The merchandise imports surge reflected the soaring global crude oil prices, strong demand for raw material, intermediates and finished products in response to firming up of industrial activity, RBI said.
The central bank said India emerged as a favoured travel destination with international tourist traffic rising by 26.8 per cent in the relevant quarter while software exports were resilient during April-June period this fiscal.
Private transfers, comprising remittances from Indians working abroad, constituted nearly 30 per cent of gross invisible receipts, it said.
A sharp rise in invisible payments in relation to Q1 of FY-03 was due to growth in transportation, outbound tourist traffic and insurance payments associated with merchandise trade and expanding demand for business services like management consultancy.
RBI said net inflows of $5.6 billion were mainly driven by external commercial borrowings, short-term trade credits due to substantially higher crude oil imports and foreign direct investments.
The ECBs showed three-fold growth at $1.2 billion in Q1 of FY-05 from $400 million in April-June 2003. The FDI inflows in the same period were up at $1.2 billion from $700 million, RBI said.
New outflows were recorded by foreign institutional investors, reflecting the generally subdued appetite for Asian markets. However, there was a marginal net inflow under portfolio investment due to American and Global Depository Receipts, it said.
The non-resident deposits registered net outflows responding to alignment of interest rates with returns in the international markets, RBI said.
Banks in India increased their recourse to overseas borrowings and drew down foreign currency assets held abroad, it said.
The surplus in the current and capital accounts were reflected in an accretion to the foreign exchange reserves of $7.5 billion on a balance of payments basis in April-June 2004.
With $119.5 billion in kitty at end of June 2004, India held the fifth largest stock of reserves among the emerging market economies and sixth largest in the world, it added.