The Hindu Business Line : Current account deficit doubles

The country's current account deficit has almost doubled to $6.928 billion in the quarter ended September 30 against $3.578 billion in the corresponding quarter of last year driven largely by oil imports.

This has been compensated by a marginal increase in capital account to $9.196 billion against $8.834 billion. Net capital inflows largely include foreign direct investments, foreign institutional investors and NRI deposits. India's balance of payments had a surplus of $2.27 billion for the second quarter this fiscal against $5.26 billion surplus in the corresponding quarter last fiscal.

Trade deficit for the quarter also jumped to $17.933 billion against $13.160 billion with import growth outstripping exports.

Oil imports

While oil imports rose by 31 per cent in July-September, 2006 (56.1 per cent in July-September, 2005), non-oil imports moved up by 13.9 per cent (43.1 per cent) mainly due to decline in imports of export-related items and gold and silver, said the RBI's release on India's Balance of Payments for the second quarter (July-September, 2006) of 2006-07.

Oil imports reflected hardening of prices of the Indian basket for international crude (a mix of Dubai and Brent varieties), which rose to $66.8 per barrel in Q2 of 2006-07 from $49.3 per barrel in the corresponding quarter of the previous year.

Deceleration in export growth follows a slowdown in exports of manufactured goods, such as chemical and related products, textile and textile products, leather and manufactures and decline in handicrafts and gems and jewellery exports.

Maintaining the pace of growth in travel earnings, business and professional services, software services and remittances, invisibles (net) rose to $11.005 billion from $9.582 billion. Receipts on account of business services were at $10.806 billion against $4.555 billion and receipts on software services were at $12.966 billion against $10.321 billion last year.

NRI deposit inflows were up at $2.029 billion against $233 million last year. ECBs touched $5.093 billion ($2.925 billion) and FDI touched $4.218 billion ($2.129 billion).

Net FDI into India accelerated on the strength of sustained domestic activity and positive investment climate with inflows going into manufacturing, business and computer services. FDI investments by Indian companies remained in line with the appetite of Indian companies for global expansion in terms of markets and resources.

Private transfers, comprising primarily remittances from Indians working overseas, remained steady at $11.2 billion in April-September 2006 compared with $10.5 billion in April-September 2005.

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Current account deficit doubles

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