India swings to bigger-than-expected current account surplus

India’s current-account balance swung to a surplus last quarter, thanks to robust services exports and a narrower trade deficit.

The current account, the broadest measure of overseas trade, was in a surplus of $6.5 billion, or 0.9% of gross domestic product, in the three months ended June, the Reserve Bank of India said in a statement on Thursday. The median in a Bloomberg survey of 11 economists was for a surplus of $2 billion.

The account was in a deficit of $8.1 billion in the January to March period, while it was in a surplus $19 billion, or 3.7% of GDP, in the comparable year-ago period.

The latest surplus came on the back of a contraction in the trade deficit to $30.7 billion from $ 41.7 billion in the preceding quarter, and an increase in services receipts, the RBI said. Income from services exports increased, both sequentially and on a year-on-year basis, on the back of robust performance of computer and business services, the central bank added. 

Thursday’s data, which covers a period when economic activity in India was curbed to stem a second wave of Covid-19 infections, saw private transfer receipts, mainly representing remittances by Indians employed overseas, rise 14.8% from a year ago to $20.9 billion.

Net foreign portfolio investment was $0.4 billion as compared with $0.6 billion a year ago. Foreign direct investment recorded a inflow of $11.9 billion as against outflow of $0.5 billion a year ago, the RBI said.