The Hindu Business Line : Current account surplus of $1.8 b in Q4

Reversing a trend of current account deficits in the first three quarters of 2005-06, the country has achieved a current account surplus of $1.8 billion in the fourth quarter, thanks mainly to a 40.7-per cent pick up in software exports and 16.9 per cent rise in private transfers.

In the fourth quarter of the previous year, there was a current account surplus of $527 million, according to data released by the Reserve Bank of India.

Exports also grew more at 22.9 per cent, compared with 20.7 per cent in the fourth quarter of 2004-05 and were "more broadbased".

Fall in imports

Non-oil imports witnessed a decline of 4.6 per cent during the quarter, compared with a growth of 59.7 per cent in the corresponding period of the previous year.

Oil exports, however, rose 48.3 per cent against 43.6 per cent previously.

On the overall, growth in imports was only 20.1 per cent against 59.1 per cent previously — this deceleration also helped achieve a favourable current account balance.

Due to favourable capital inflows, balance of payments for the quarter was a favourable $13.22 billion against $12.63 billion previously.

But because of the deficits in the first three quarters, the year 2005-06 saw a current account deficit of $10.61 billion, higher than the deficit of $5.4 billion in 2004-05. Net capital inflows were also lower in 2005-06 at $24.69 billion against $31.02 billion in the previous year, although the FDI component increased sharply to $5.7 billion against $3.2 billion.

Portfolio investment was also buoyant at $12.49 billion against $8.9 billion in the previous year.

The drop in overall capital inflows came from ECBs ($1.6 billion against $5.4 billion) and `other banking capital' (minus $1.4 billion against $4.8 billion).