India’s balance of payments position continued to remain comfortable during the first half of 2007-08 (April-September). The merchandise trade deficit, on balance of payments basis, widened to US$ 42.4 billion in April-September 2007 from US$ 33.8 billion in April-September 2006. Net surplus under invisibles (services, transfers and income taken together) was higher at US $ 31.7 billion in April-September 2007 (US $ 23.4 billion in April-September 2006). The net invisible surplus offset a large part of the trade deficit (74.7 per cent during April-September 2007 as compared with 69.4 per cent during April-September 2006).
Despite large merchandise trade deficit, higher net invisible surplus, mainly emanating from private transfers, contained the current account deficit at US $ 10.7 billion in the first half of 2007-08 (US $10.3 billion in April-September 2006). The current account deficit was financed by capital flows which have remained large during 2007-08 so far.
During 2007-08 (up to January 11, 2008), net inflows by FIIs amounted to US $26.8 billion (US $ 2.5 billion in the corresponding period of 2006-07).
Inflows under foreign direct investment (FDI) were US $ 13.8 billion during April-November 2007 as against US $ 10.1 billion during the corresponding period of the previous year. During the current financial year 2007-08 (April-September), inflows (net) under external commercial borrowings (ECBs) amounted to US $ 10.6 billion (US $ 5.7 billion during April-September 2006). The ECB approvals (including under the automatic route) amounted to US $ 23.3 billion during April-December 2007 as compared with US $ 15.3 billion during April-December 2006. Non-resident Indians’ deposits registered net outflows of US $ 433 million during April-September 2007 as against net inflows of US $ 3.0 billion during April-September 2006.
According to the data released by the Directorate General of Commercial Intelligence and Statistics (DGCI&S), during 2007-08 so far (April-November), merchandise exports posted a growth rate of around 22 per cent moderating from the growth rate of 26.2 per cent during April-November 2006, while growth in imports at 26.9 per cent was marginally lower than that of 27.4 per cent in April-November 2006. Non-oil imports recorded a substantial increase, while oil imports showed a sharp deceleration in growth. Overall, the merchandise trade deficit widened to US $ 52.8 billion in April-November 2007 from US $ 38.5 billion in April-November 2006.
India’s foreign exchange reserves were US $ 284.9 billion as on January 18, 2008, showing an increase of US $ 85.7 billion over end-March 2007.
Source: Business Standard
