India recorded a current account surplus of $5.7 billion or 0.6 per cent of GDP in the March 2024 quarter, according to the latest RBI data released on Monday. This marks a significant improvement from the year-ago period, where the country had a current account deficit of $1.3 billion or 0.2 per cent of GDP.

In the preceding quarter ending December 2023, the deficit was even higher at $8.7 billion or 1 per cent of GDP.

For the entire fiscal year 2023-24 (FY24), India’s current account deficit sharply narrowed to $23.2 billion, representing 0.7 per cent of GDP, compared with $67 billion or 2% of GDP in the previous fiscal year (FY23), according to RBI’s press release on the ‘Developments in India’s Balance of Payments’ on June 24.

Anil Kumar Bhansali, head of treasury and executive director of Finrex Treasury Advisors LLP, said, “India’s CAD moderated to $23.2 billion at 0.7 per cent of GDP for 2023-24 as against $67 billion at 2 per cent of GDP for 2022-23. This is on the back of the lower merchandise trade deficit. Portfolio investment jumped on a net inflow of $44.1 billion as against net outflow of $5.2 billion a year ago. FDI inflow stood at $9.8 billion as against $28 billion a year ago. Accretion to forex reserves was $63.7 billion.”

Balance of Payment During Q4 2023-24

During the March 2024 quarter, 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, the RBI said.

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, it added. 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, said the central bank.

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, the RBI said.

Non-resident deposits recorded a higher net inflow of US$ 5.4 billion than US$ 3.6 billion in Q4:2022-23.

Balance of Payment During Full Financial Year 2023-24

According to the latest RBI data, net invisibles receipt during FY24 was higher than a year ago, primarily on account of services and transfers. Portfolio investment recorded a net inflow of $44.1 billion as against an outflow of $5.2 billion a year ago.

Net FDI inflow was $9.8 billion during 2023-24 as compared with $28.0 billion in 2022-23.

In 2023-24, there was an accretion of $63.7 billion to the foreign exchange reserves (on a BoP basis).