BoP surplus touches $7.2bn in Oct-Dec

Net capital flows under capital account fall to $5.9bn

The government has posted a balance of payment (BoP) surplus of $7.2 billion for the October-December quarter of 2003-04 as against a surplus of $ 6.1 billion for the corresponding period in 2002-03.

The surplus in balance of payment recorded for the second quarter July-September stood at $8.4 billion.

For the April-December period of 2003 as a whole, trade deficit widened sharply to $15 billion compared to $9.8 billion for the corresponding period in 2002.

A Reserve Bank of India release said this surplus had raised the level of foreign exchange reserves to $101 billion by the end of December 2003.

The current account has recorded a marginally higher surplus of $1.8 billion during the third quarter as compared to $1.6 billion in the second quarter.

For the entire period of April-December 2003, the current account had a surplus of $3.2 billion as against $2.9 billion during the corresponding period of 2002.

On the contrary, net capital flows under the capital account fell to $5.9 billion compared to $6.1 last quarter owing to the prepayments of multilateral and bilateral debts by the government to the tune of $2 billion and redemptions of $4.2 billion worth of Resurgent India Bonds.

On the whole, net capital flows for the financial year 2003-04 till December, grew significantly at $17.3 billion, driven mainly by foreign investment flows, banking capital, short-term credit, which grew to $10.1 billion, $5.6 billion, $2.4 billion and $5 billion, respectively.

The growth for the period was, however, offset by the net outflows under external assistance of $1.8 billion and external commercial borrowing of $3.7 billion.

A break-up of the components reveals the fact that on payment basis, trade deficit has widened to $5.6 billion from $4.2 billion in the previous quarter and $4.4 billion during the corresponding period last year. Although exports have surged, the release added that the rise could only offset the hike in the import payments during the quarter.

The surplus resulted through an sustained rise in gross invisible receipts under private transfers, resilience of software exports and earnings from the tourism sector.

Surging ahead

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• Balance of payment Surplus in July-September quarter stood at $8.4billion
• Surplus raised the level of forex reserves to $101 billion at the end of December 2003
• In April-December, 2003, trade deficit widened sharply to $15 billion compared to $9.8 billion for the corresponding period in 2002
• The current account has recorded a marginally higher surplus of $1.8 billion
• Net capital flows under the capital account fell to $5.9 billion compared to $6.1 billion last quarter owing to the prepayment of multilateral and bilateral debts
• Net capital flows for the financial year 2003-04 till December grew significantly at $17.3 billion