India's external position appears robust with green shoots becoming visible in merchandise trade and robust capital flows, the Economic Survey said today.
According to the mid-year survey, the country's external sector witnessed a turnaround in 2016-17 with export growth becoming positive after two years of continuous negative growth.
At the same time import growth remained negative, though marginally, for the fourth year in succession resulting in narrowing down of both trade deficit by 1.2 percentage points to 5 per cent of GDP and current account deficit by 0.4 percentage points to 0.7 per cent of GDP, it said.
"Some green shoots have started to appear in the trade horizon as well with world trade growth projected at 3.8 per cent and 3.9 per cent in 2017 and 2018 and India's trade growth also picking up," said the Economic Survey-part II.
It, however, added that "sustaining current growth trajectory will require action on more normal drivers of growth such as investment and exports and cleaning up of balance sheets to facilitate credit growth".
India's export growth continued to be negative in the first half of 2016-17. However, in the second half of 2016-17, it registered positive growth resulting in exports reaching USD 276.3 billion with positive growth of 5.3 per cent for the whole year 2016-17.
Among India's trading partners, the top five countries with which India's bilateral trade balance is negative are China, Switzerland, Saudi Arabia, Iraq and Indonesia, while the top five countries with which it has surplus trade balance are the US, the UAE, Bangladesh, Hong Kong and Nepal.
The survey said in 2016-17, there was a robust growth in gross foreign direct investment of 18.2 per cent, accretion in foreign exchange reserves and fall in external debt by 2.7 per cent which had contributed to a more stable external sector situation reflected in rising reserves and a strengthening exchange rate.
It further said during the year gross FDI inflows to India increased significantly to USD 60.2 billion from USD 55.6 billion in 2015-16.
"Net FDI inflows (i.E. Net of outward FDI) at USD 35.6 billion, however, moderated marginally by 1.1 per cent from USD 36.0 billion in 2015-16," the survey added.
India's aggregate external debt stock at end-March 2017 stood at USD 471.9 billion as against USD 13.1 billion over end-March 2016, a decline of 2.7 per cent, it said.
The ratio of external debt to GDP fell to 20.2 per cent from 23.5 per cent, while foreign exchange reserves provided a cover of 78.4 per cent to external debt compared to 74.3 per cent in the previous year, the survey added.
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