After 10 quarters, India recorded a current account surplus of $5.7 billion (0.6% of GDP) in the fourth quarter of fiscal year 2024. However, for the full fiscal year 2023-24, the country recorded a trade deficit that more than halved, falling to a seven-year low of $67 billion.

The surplus is attributed in the press release to rising services exports and rising remittances. Services exports rose 4.1% year-on-year, driven by rising exports of software, travel and business services. Net services receipts contributed to the current account surplus in the fourth quarter.

Remittances from Indians working abroad also increased by 11.9% year-on-year to $32.0 billion.

The current account deficit in the third quarter of the same fiscal year was minus $8.7 billion, equivalent to 1 percent of GDP.

The Reserve Bank of India yesterday released the balance of payments data for the fourth quarter of fiscal year 2023-24 for the period between January and March this year.

This is primarily due to a narrower trade deficit, which was $50.9 billion in the fourth quarter of 2023-24, down from $52.6 billion a year ago.

The net deficit in primary income, which reflects payments from investment income, rose to $14.8 billion from $12.6 billion a year earlier.

The release also highlighted a decline in net foreign direct investment inflows to $2 billion in the fourth quarter of 2023-24, compared to the same quarter a year ago when they were $6.4 billion.

Foreign portfolio investment recorded a net inflow of $11.4 billion in the fourth quarter of 2023-24, significantly higher than the inflows in the fourth quarter of 2022-23.

India's net external borrowing in the commercial sector increased by 52.94% to reach $2.6 billion in the fourth quarter of 2023-24, compared to $1.7 billion in the same quarter last year.

Net revenues from invisible items were higher in 2023–24 than in the previous year, mainly due to services and transfers.

In 2023-24, portfolio investments recorded a net inflow of $44.1 billion, compared to an outflow of $5.2 billion in the previous year.

Net foreign direct investment inflows amounted to $9.8 billion in 2023-24, compared to $28.0 billion in 2022-23.

The publication also indicated an increase in foreign exchange reserves.

“On a balance of payments basis (i.e. excluding valuation effects), foreign exchange reserves increased by $63.7 billion in 2023-24, while they decreased by $9.1 billion in 2022-23,” the release said. “Foreign exchange reserves in nominal terms (including valuation effects) increased by $68.0 billion in 2023-24, while they decreased by $28.9 billion in the previous year,” the RBI added.

This represents a valuation gain of $4.3 billion in 2023-24 compared to a valuation loss of $19.7 billion in 2022-23, mainly due to gold prices.