The Hindu : Overall balance shows $17b surplus in 02-03

Online edition of India's National Newspaper
Tuesday, Jul 01, 2003

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Business

Overall balance shows $17b surplus in 02-03

By Our Special Correspondent

MUMBAI JUNE 30. The Reserve Bank of India today released the revised balance of payments (BoP) position for 2002-03 and the overall balance showed a surplus of $17 billion in 2002-03 compared with a surplus of $11.8 billion 2001-02, excluding valuation changes. The current account balance recorded a higher surplus at $3.7 billion (provisional) as compare with $0.8 billion (partially revised) in the previous year.

The overall balance showed a net inflow of $4.3 billion during January-March 2003 compared with an inflow of $6.2 billion in January-March 2002.

The increase in foreign currency reserves, including valuation changes but excluding gold, was $20.8 billion in 2002-03 as compared with $11.6 billion in the previous year. Thus, the valuation changes amounted to $3.8 billion during fiscal 2002-03 as against (-) $0.2 billion in the previous year.

BoP data for fiscal 2001-02 have also been revised taking into account the latest data on exports, imports, software exports, external assistance, external commercial borrowings and NRI deposits. In addition to these changes, the BoP data for 2000-01 and 2001-02 have undergone changes on account of compilation of FDI to approach the best international practices, which take into account `equity capital of unincorporated entities,' `reinvested earnings,' and `other capital' (inter-corporate debt transactions between the related entities) in addition to equity capital of FDI companies.

In terms of standard practice of BoP compilation, the revision of FDI data would not affect India's overall BoP position for these two years, the RBI stated. However, it stated that there would be corresponding changes in the composition of BoP. Following the new methodology, appropriate changes have been made in the current and capital account transactions of BoP. As a result, the current account surplus during 2001-02, which amounted to $1.4 billion, has been revised to $0.8 billion. Furthermore, the current account deficit during 2000-01 has increased from $2.6 billion to $3.6 billion.

Foreign direct investment (FDI) to India was $4.7 billion in 2002-03 as against $6.1 billion in 2001-02. Similarly, FDI abroad by Indian companies was $1 billion in 2002-03 as against $1.4 billion in the previous year. Therefore, the net FDI in India was $3.6 billion in 2002-03 compared with $4.7 billion in 2001-02. The total portfolio investment was lower at $0.9 billion in 2002-03 than $1.9 billion recorded in 2001-02. Net inflows under non-resident deposits at $2.8 billion in 2002-03 than $1.9 billion recorded in 2001-02. On the payments basis, the merchandise exports and imports were $53 billion and $65.5 billion, respectively during 2002-03 as compared with $ 44.9 billion and $57.6 billion during 2001-02. Trade deficit on payments basis was marginally lower at $12.5 billion than that of $12.7 billion in the previous year.

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