Three-fold rise in net capital inflows

Reflecting depressed conditions abroad, India’s current account deficit (CAD), a broad indicator of trade and investment flows, remained almost flat at a high of $12.62 billion in the second quarter of the fiscal against the year-ago period, despite fall in oil imports. CAD remained at the high level even as oil imports fell during the period due to decline in global oil prices. Oil imports accounted for about 28.7 per cent of total imports in Q2 against 35 per cent a year ago. CAD was high as surplus from trade in invisibles, which includes services, declined by over 25 per cent to $19.57 billion ($26.54 billion). Within this category, software exports fell by about 10 per cent to around $10 billion from over $11 billion. As far as capital inflows are concerned, the country’s net inflows rose three-fold to $23.6 billion from a mere $7.1 billion, as FII inflows in the capital markets turned positive during the period from negative during the year ago period.