The Hindu Business Line : Current account sees higher surplus of $1.8 b in Q3

The country's current account recorded a higher surplus of $1.8 billion in the third quarter of 2003-04, up from a surplus of $1.6 billion recorded in the previous quarter. In October-December 2002, the current account had registered a lower surplus of $0.9 billion.

On an overall basis of movements in current and capital accounts, there was a lower surplus of $7.2 billion in October-December 2003 against $8.4 billion in July-September 2003. The surplus was lower in the third quarter of the previous year at $6.1 billion, according to the data released by the Reserve Bank of India.

On a payment basis, the merchandise trade deficit widened to $5.6 billion from $4.2 billion in the previous quarter of the current year. It was still lower at $4.4 billion in the third quarter of 2002. The higher trade deficit in October-December 2003 reflected a strong pick-up in import payments in relation to the previous quarters of the year. Export growth was particularly robust in December 2003 but this could only offset partially the rise in import payments during the quarter.

The invisible account recorded a net surplus of $7.4 billion in October-December 2003 against $5.8 billion in the previous quarter and $5.3 billion in October-December 2002.

Gross invisible receipts maintained a rising profile as in the rest of the year, mainly on account of the continuing growth of inward remittances recorded under private transfers, the resilience of software exports recorded in the miscellaneous account and a surge in earnings from tourism.

Net capital flows fell to $5.9 billion in October-December 2003 from $6.1 billion in the previous quarter on account of prepayment of multilateral and bilateral debt by the Government of India ($2 billion) and redemption of Resurgent India Bonds ($4.2 billion, excluding accrued interest).

The debt-creating components under external assistance and external commercial borrowings recorded significant outflows ($1.6 billion and $3.6 billion respectively). Net drawals of short-term credit declined sharply in the quarter to $0.3 billion from an average level of $1 billion in the previous quarters of the year.

Net foreign investment inflows reached their highest level in October-December 2003 ($5 billion) in comparison with preceding quarters. This was mainly on account of portfolio inflows of $4.1 billion from foreign institutional investors (FIIs). Net inflows in the form of foreign direct investment remain stable and broadly at the level of the previous quarters ($1 billion).

For the nine months ended December 2003, the current account recorded a surplus of $3.2 billion ($2.9 billion in April-December 2002).

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