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BL Research Bureau

INDIA'S external transactions on the current account have recorded a modest surplus of $159 million for the quarter ended March 2005, reversing the trend of large deficits recorded in the two preceding quarters. The RBI revealed this in the balance of payments figures released by it on Thursday.

Significant increases in merchandise exports and the moderation in import payments ensured that trade deficit at $11.5 billion was slightly lower than the amount for the quarter ended December 2004.

A sizeable jump in `net invisibles' neutralised the impact of the deficit on merchandise trade. The accrual under invisibles in the last quarter was $11.6 billion as against $6.3 billion for the quarter ended December 2004.

In the last few years, the rise in net invisibles was usually due to an increase in the contribution of software services and private transfers.

For the quarter ended March 2005, however, net receipts from miscellaneous services other than software has also increased substantially to $1.6 billion.

Net receipts from miscellaneous services other than software were negative in the previous three quarters. According to the RBI, invisible receipts were at an intra-year peak, driven by remittances, business and professional services.

For the year as a whole, the current account still ended with a deficit of $6.4 billion, reversing a trend of annual surpluses recorded since March 2001.

The size of the deficit is also the largest ever since the liberalisation of the economy in 1991. Trade deficit has hit a historic high of $38.1 billion. Non-oil imports during the year rose by 49.5 per cent, keeping pace with the oil import bill, which rose by 45.1 per cent.

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