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Current account deficit soars to $10.7 b in first quarter
| Oil bill accounts for 35 per cent of total imports |
Trade deficit rises to $31.6 b in first quarter
Portfolio investment records large net outflows
MUMBAI: Slowdown in the global economy and bearish market conditions are impacting inflow of funds from foreign institutional investors (FIIs) even as the current account deficit during the first quarter of 2008-09 soared to $10.7 billion, says a report by the Reserve Bank of India.
Portfolio investment, the RBI said in its report on Balance of Payments, witnessed large net outflows ($4.2 billion) in the first quarter of 2008-09 due to large sales of equities by FIIs in the Indian stock market reflecting bearish condition in stock market and slowdown in global economy.
There was a net inflow of portfolio investment of $7.5 billion in the first quarter of 2007-08. The report further said that current account deficit during the first quarter increased to $10.7 billion from $6.3 billion in the corresponding period last year mainly on account of higher imports.
Driven by higher import bill, which increased by more than 50 per cent, trade deficit during the first quarter rose sharply to $31.6 billion from $20.7 billion in the corresponding period a year ago.
Oil imports in the first quarter accounted for almost 35 per cent of the country’s import bill. According to the report, the Indian basket of international crude (a mix of Oman, Dubai and Brent varieties) increased to $118.8 a barrel from $66.4 a barrel in the corresponding period last year. Non-oil imports, however, recorded a modest growth of 20.9 per cent, down from 45.1 per cent in Q1 of 2007-08. On the invisible account, receipts comprising services, current transfers and income rose by 29.7 per cent in the first quarter of 2008-09 compared to 16.7 per cent during the same period last year, primarily on account of an increase in receipts under private transfers along with the steady growth in software services exports, travel and transportation.
Private transfers, which include remittances from Indian workers abroad, and local withdrawal from NRIs, increased to $12 billion in the first quarter in 2008-09 from $7.8 billion a year ago. — PTI
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