Developments in India's Balance of Payments During Fourth Quarter (January-March) of 2011-12

Developments in Indias Balance of Payments
during Fourth Quarter (January-March) of 2011-12

RBI Monthly Bulletin August 2012
1483
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With export growth remaining substantially lower
than import growth, the trade decit widened to
US$ 51.6 billion in Q4 of 2011-12 as compared
with US$ 30.0 billion in Q4 of 2010-11.
Growth in net services exports in Q4 of 2011-12
also decelerated to 21.1 per cent as compared to
72.0 per cent in Q4 of 2010-11.
Falling exchange rate seems to have induced a
significant pick up in net secondary income
(private transfers) receipts which rose by 24.0 per
cent (y-o-y) to US$ 16.9 billion in Q4 of 2011-12 as
compared with US$ 13.6 billion in Q4 of 2010-11.
The primary income account (mainly investment
income) showed a net outow of US$ 4.6 billion
in Q4 of 2011-12, broadly the same as in the
corresponding quarter of the previous year.
Consequently, the current account decit (CAD)
widened to US$ 21.7 billion in Q4 of 2011-12
which works out to 4.5 per cent of GDP (US$ 6.3
billion in Q4 of 2010-11 i.e., 1.3 per cent of GDP).
Capital and Financial account (excluding change
in foreign exchange reserves), on a net basis,
recorded a higher inow of US$ 16.5 billion in Q4
of 2011-12 as compared with US$ 9.1 billion in Q4
of 2010-11.
Despite signicant improvement in the capital
inows in Q4 of 2011-12, there was a drawdown
of foreign exchange reserves of US$ 5.7 billion
(excluding valuation) as against an increase of US$
2.0 billion in the corresponding quarter of 2010-11,
essentially reecting deterioration in the current
account.
Highlights of BoP during 2011-12
During 2011-12, Indias BoP deteriorated as trade
decit widened and invisibles remained sluggish due
to low external demand and relatively inelastic imports
Developments in Indias Balance of
Payments during Fourth Quarter
(January-March) of 2011-12*
The data on Indias Balance of Payments (BoP) are
compiled and published by the Reserve Bank on a
quarterly basis with a lag of one quarter. This article
covers the analysis of major developments in Indias
BoP during the fourth quarter of 2011-12 along with
the quarterly revised data for earlier three quarters of
2011-12 on the basis of new format of BoP
1
. These data
have been provided in the statistical section of the
Bulletin
In addition, the disaggregated data on invisibles
for all the quarters of 2011-12 and annual data for the
preceding two years are also being published as a part
of this article (Attachment I).
Highlights of BoP during January-March
(Q4) of 2011-12
The stress witnessed in Indias BoP in Q3
continued during Q4 of 2011-12 as well with trade
decit and current account decit widening to highest
ever levels. Capital inflows improved reflecting
signicant increase in portfolio investment and non-
resident deposits, however, they fell short of nancing
requirements, resulting in a drawdown of foreign
exchange reserves. The trade decit on BoP basis during
the fourth quarter exceeded US$ 50 billion (10.6 per
cent of GDP) and CAD has been nearly US$ 22 billion
(4.5 per cent of GDP).
On a BoP basis, growth in merchandise exports
(y-o-y) decelerated sharply to 3.4 per cent during
Q4 of 2011-12 from 46.9 per cent during the
corresponding quarter of 2010-11.
Imports registered a growth of 22.6 per cent during
Q4 of 2011-12 as compared with 27.7 per cent in
the corresponding quarter of the preceding year.
1
Prepared in the Division of International Trade and Finance, Department
of Economic and Policy Research, Reserve Bank of India.
2
The Balance of Payments data are compiled and presented based on the
IMF guidelines set out in its Balance of Payments Manual Sixth Edition
(BPM-6).
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1484
of POL & gold and silver. Capital ows, though have
been higher than that in the preceding year, were
inadequate and the gap had to be met through draw
down of reserves.
In 2011-12, the trade decit rose to US$ 189.7
billion amounting to 10.3 per cent of GDP from
US$ 130.4 billion (7.7 per cent of GDP) in 2010-11.
Similarly, CAD also rose to US$ 78.2 billion (4.2
per cent of GDP) from US$ 46.0 billion (2.7 per
cent of GDP) in 2010-11.
Net inows under Capital and Financial account
(excluding changes in reserve assets) were higher
at US$ 67.8 billion during 2011-12 as compared
with US$ 62.0 billion during 2010-11. There was
a draft on reserves to the extent of US$ 12.8 billion
during the year as against an accretion of US$ 13.1
billion in 2010-11.
1. Balance of Payments during January-
March (Q4) of 2011-12
Stress witnessed in Indias BoP during the rst
three quarters of 2011-12 continued in Q4 of 2011-12
as trade balance deteriorated further and invisibles
account remained subdued resulting in further
widening of current account decit. While, the rupee
depreciation, given the weak and lagged relationship
of exports with exchange rate movement, could not
boost export performance, the inelastic nature of
imports in particular POL and gold & silver, in the wake
of rising international prices, widened the trade gap
further. Though, inows under capital and nancial
account, improved partly responding to policy measures
announced by the RBI to encourage ows under NRI
deposits, ECB and FII investments, the level of ows,
however, remained insufcient to meet the widening
current account decit and there was net withdrawal
from foreign exchange reserves. The developments in
the major items of the BoP for Q4 of 2011-12 are set
out below in Table 1.
Goods Trade
On a BoP basis, growth in merchandise exports
(y-o-y), decelerated sharply to 3.4 per cent during
Q4 of 2011-12 as compared to 46.9 per cent in the
same quarter of previous year. Export diversication
efforts could not sustain favourable results as the
sluggish economic conditions in advanced
economies gradually spilled over to the developing
world.
Table 1: Major items of Indias Balance of Payments
(US$ billion)
Fourth Quarter
January-March
Full Year
April-March
2011 (PR) 2012 (P) 2010-11 (PR) 2011-12 (P)
1. Goods exports 77.4 80.0 250.6 309.8
2. Goods Imports 107.4 131.7 381.1 499.5
3. Trade Balance(1-2) -30.0 -51.6 -130.4 -189.7
4. Services Exports 35.3 37.7 131.7 140.9
5. Services Imports 20.7 20.0 83.0 76.9
6. Net Services (4-5) 14.6 17.7 48.7 64.0
7. Goods & Services Balances (3+6) -15.4 -34.0 -81.8 -125.7
8. Primary Income, Net (Compensation of employees and Investment Income) -4.5 -4.6 -17.3 -16.0
9. Secondary Income, Net ( Private Transfers) 13.6 16.9 53.1 63.5
10. Net Income (8+9) 9.1 12.3 35.8 47.5
11. Current Account Balance (7+10) -6.3 -21.7 -46.0 -78.2
12. Capital and Financial Account Balance, Net (Excl. change in reserves) 9.1 16.5 62.0 67.8
13.Change in Reserves (-)increase/(+)decrease -2.0 5.7 -13.1 12.8
14. Errors & Omissions (-)(11+12+13) -0.8 -0.6 -3.0 -2.4
P: Preliminary; PR: Partially Revised
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Despite the slowdown in domestic economic
activity and rupee depreciation, growth in
merchandise imports (on BoP basis) moderated
only mildly from 27.7 per cent in Q4 of 2010-11
to 22.6 per cent in Q4 of 2011-12, reflecting
inelastic demand for gold and crude oil. The non-
oil non-gold segment of imports, grew by 15.4 per
cent, much lower than 26.1 per cent in Q4 of the
previous year.
While the rise in oil imports was largely a reection
of higher international prices, rise in gold imports
has been due to increase in both quantum as well
as prices. The price of Indian basket of crude oil
at the elevated level of US$ 117.3 per bbl has been
around 15 per cent higher than that in the same
period in the preceding year (Chart 1).
Trade Decit
With faster growth in imports than in exports, the
trade decit increased to US$ 51.6 billion in Q4 of
2011-12 (10.6 per cent of GDP) as compared with
US$ 30.0 billion in Q4 of 2010-11, showing an
increase of around 72 per cent on y-on-y basis
(Chart 2).
Services
During the quarter though growth in services
exports witnessed sharp moderation, decline in
services imports in absolute terms, resulted in
improvement in exports of services on a net basis
(Table 2).
During the quarter, growth in services receipts on
y-o-y basis, moderated to 6.7 per cent (27.4 per
cent in Q4 of 2010-11) and services payments
declined by 3.4 per cent largely on account of
contraction in payments of nancial services. Net
services exports, thus, amounted to US$ 17.7
billion (US$ 14.6 billion in Q4 of 2010-11). Rise in
services receipts was mainly contributed by
software services and travel. Improvement in the
latter may be attributed to higher prices and
depreciation of rupee (Table 2).
Income
While net outow on account of primary income
continued, there has been a sharp increase in net
secondary income in Q4 of 2011-12 (Table 2). The sharp
rise under secondary income account may be attributed
to weakening of Indian rupee which induced higher
workers remittances for family maintenance.
Net outow on account of primary income in Q4
of 2011-12 at US$ 4.6 billion was broadly the same
as recorded in Q4 of 2010-11 (US$ 4.5 billion).
Compensation of employees continued to record
surpluses, albeit marginal, in Q4 of 2011-12 for
the fourth successive quarter.
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During Q4 of 2011-12, payments on account of
investment income, comprising mainly the
interest payments on the external commercial
borrowings (ECBs), NRI deposits and prots &
reinvested earnings of FDI companies in India,
rose by 2.9 per cent. In contrast, investment
income receipts, largely representing earning on
foreign currency assets, recorded a decline of 7.3
per cent in Q4.
Secondary income (on a net basis), reflecting
mainly the remittances from overseas Indians, at
US$ 16.9 billion remained buoyant and recorded
a growth of 23.9 per cent in Q4 as compared with
8.1 per cent in Q4 of 2010-11.
Current Account
Despite improvement in secondary income and
a marginal rise in net services receipts, higher trade
deficit coupled with deterioration in the primary
income led to an all time high of current account decit
during January-March 2012. The CAD widened to US$
21.7 billion in Q4 as compared with US$ 20.2 billion in
Q3 of 2011-12 and US$ 6.3 in Q4 of 2010-11. At this
level, CAD worked out to 4.5 per cent of GDP in Q4 of
2011-12 as compared with 1.3 per cent in Q4 of 2010-11.
Table 2: Disaggregated Items of Current Account (net)
(US$ billion)
Fourth Quarter
January-March
Full Year
April-March
2011 (PR) 2012 (P) 2010-11 (PR) 2011/12 (P)
1. Goods -30.0 -51.6 -130.4 -189.7
2. Services 14.6 17.7 48.7 64.0
2.a Transport 0.9 0.4 0.4 1.8
2.b Travel 1.3 2.2 4.2 4.7
2.c Construction -0.2 -0.1 -0.5 -0.2
2.d Insurance and pension services 0.3 0.3 0.5 1.1
2.e Financial Services -0.4 -0.4 -1.0 -2.0
2.f Charges for the use of intellectual property -0.5 -0.9 -2.2 -2.9
2.g Telecommunications, computer and information services 15.5 16.7 53.8 60.7
2.h Personal, cultural and recreational services -0.1 0.05 -0.3 0.1
2.i Government goods & services -0.1 -0.2 -0.3 -0.3
2.j Other Business services -0.9 -0.2 -3.9 -0.9
2.k Others n.i.e -1.3 -0.2 -2.1 1.9
3. Primary Income -4.5 -4.6 -17.3 -16.0
3.a Compensation of Employees -0.2 0.01 -0.9 0.5
3.b Investment Income -4.3 -4.6 -16.4 -16.5
4. Secondary Income 13.6 16.9 53.1 63.5
4.a Personal Transfers 13.1 16.4 51.5 61.5
4.b Other Transfers 0.5 0.4 1.6 2.0
5. Current Account (1+2+3+4) -6.3 -21.7 -46.0 -78.2
Note: Total of subcomponents may not tally with aggregate due to rounding off.
P: Preliminary; PR: Partially Revised.
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Capital & Financial Account
Growing fragility in global nancial markets and
slowdown in the domestic economy continued to
impact the long term nancial ows to India in Q4 of
2011-12. However, ows under FII investment and NRI
deposits revived during the quarter, following the policy
measures announced by the Reserve Bank.
Net inows under capital and nancial account
(excluding change in foreign exchange reserves)
improved signicantly to US$ 16.5 billion in Q4 of
2011-12 as compared with US$ 7.9 billion during Q3 of
2011-12 and US$ 9.1 billion in Q4 of 2010-11 (Table 3).
Capital Account
The capital account, which includes official
transfers and purchase/sale of intangible assets like
patents, copyrights, trademarks, etc., recorded a
marginal decit of US$ 0.2 billion during January-March
2012 mainly on account of other capital transfers.
Financial Account
The gross nancial inows, excluding reserve
changes, in Q4 amounted to US $ 125.8 billion
during Q4 of 2011-12 (US$ 117.5 billion a year ago)
and similarly gross nancial outows during the
period were marginally higher at US$ 109.1 billion
(US$ 108.3 billion a year ago).
On net basis, overall nancial account (excluding
changes in reserves) in Q4 recorded a steep rise
mainly on account of higher inflows under
portfolio investment, NRI deposits, banks
overseas borrowings apart from decline in FDI by
India (Table 3).
Net inows under portfolio investment improved
signicantly to US$ 13.9 billion during the quarter
Table 3: Disaggregated Items of Financial Account
(US$ billion)
Fourth Quarter
January-March
Full Year
April-March
2011 (PR) 2012 (P) 2010-11 (PR) 2011-12 (P)
1. Direct Investment (net) 1.1 1.4 9.4 22.1
1.a Direct Investment to India 5.5 4.2 25.9 33.0
1.b Direct Investment by India -4.4 -2.9 -16.5 -10.9
2. Portfolio Investment -0.01 13.9 28.2 16.6
2.a Portfolio Investment in India -0.03 14.1 29.4 16.8
2.b Portfolio Investment by India 0.02 -0.2 -1.2 -0.2
3. Other investment 8.1 1.4 24.4 29.2
3.a Other equity (ADRs/GDRs) 0.2 0.03 2.0 0.6
3.b Currency and deposits 2.0 4.6 3.8 12.1
Deposit-taking corporations, except the central bank: (NRI Deposits) 0.9 4.7 3.2 11.9
3.c Loans* 1.0 -0.03 18.6 16.8
3.c.i Loans to India 0.7 -0.02 18.3 15.7
Deposit-taking corporations, except the central bank -2.7 -2.6 1.2 4.1
General government (External Assistance) 0.8 0.3 5.0 2.5
Other sectors (ECBs) 2.7 2.3 12.2 9.1
3.c.ii Loans by India 0.3 -0.01 0.3 1.0
General government (External Assistance) -0.01 -0.04 -0.03 -0.2
Other sectors (ECBs) 0.3 0.0 0.3 1.2
3.d. Trade credit and advances 2.7 0.2 11.0 6.7
3.e. Other accounts receivable/payable other 2.2 -3.3 -11.1 -6.9
4. Reserve assets -2.0 5.7 -13.1 12.8
Financial Account (1+2+3+4) 7.1 22.4 48.9 80.7
Note: Total of subcomponents may not tally with aggregate due to rounding off.
P: Preliminary; PR: Partially Revised.
*: includes External Assistance, ECBs, non-NRI Banking Capital and short term trade credit.
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(inows of US$ 1.8 billion in Q3 of 2011-12) and
negligible ows during the same period in the
preceding year. Increase in FII inflows was
witnessed under both the category of equity and
debt partly reflecting the relaxation in FII
guidelines relating to lock-in-period.
Trade credits & advances to India in the quarter at
US$ 0.2 billion stood signicantly lower than US$
2.7 billion in Q4 of 2010-11. The rising risk
aversion and deleveraging in global financial
markets seem to have impacted the availability
and rolling over of trade credits.
Similarly, there has been a marked increase in
inows under currency and deposits of commercial
banks, i.e., NRI deposits to US$ 4.7 billion in Q4
of 2011-12 reecting the impact of exchange rate
depreciation and deregulation of interest rates on
NRI deposits.
Despite signicant improvement in the capital
and nancial account, net capital inows were not
sufcient to nance the CAD recorded in Q4,
thereby leading to a drawdown of foreign exchange
reserves to the extent of US$ 5.7 billion as against
a reserve build-up of US$ 2.0 billion in Q4 of 2010-
11. In nominal terms (i.e., including valuation
changes), foreign exchange reserves declined by
US$ 2.3 billion during the quarter.
Balance of Payments during April-March
2011-12
Taking into account the partially revised data for
Q1, Q2 and Q3 along with preliminary data for Q4, the
BoP data for the full year 2011-12 (April-March) have
been compiled. While the detailed data are set out in
Table 41 of the RBI Bulletin (Statistical Section) in the
standard format of BoP presentation, the major items
are presented in Table 1.
Economic slowdown in advanced countries and
its spillover effects in EMEs coupled with rising
commodity prices, particularly crude oil and gold, led
to sharp increase in trade decit. This caused a steep
rise in CAD to the highest ever level both in absolute
as well as in terms of GDP. Global and domestic
economic concerns also led to moderation of inows
under capital and nancial account (excluding change
in reserves) and therefore, foreign exchange reserves
had to be drawn to nance the elevated level of CAD
in 2011-12.
During nancial year 2011-12, growth in Indias
merchandise exports at US$ 309.8 billion on a BoP
basis, decelerated to 23.6 per cent as compared
with a growth of 37.5 per cent during previous
year. Slowdown was more pronounced in the
second half of the year when growth in exports
decelerated to less than 6 per cent from more than
47 per cent in the rst half. This asymmetric
pattern may partly be the result of some front of
exports loading as some incentive schemes were
to be withdrawn in the second half of the year.
Moreover, during 2011, the world trade volume
grew by mere 5.9 per cent as against 12.8 per cent
in 2010.
Import payments during the same period at US$
499.5 billion, on a BoP basis, registered a growth
of 31.1 per cent as compared with an increase of
26.7 per cent in the previous year. Like exports,
imports also decelerated during the second half
of the year from around 41 per cent to 23 per cent.
Moderation in imports during second half may
partly be attributed to weakening of domestic
demand coupled with rupee depreciation and
sluggish external demand impacting export
related imports.
At disaggregated level, growth in exports of
petroleum products, engineering goods, textile
and textile products, gems & jewellery and ores &
minerals witnessed a moderation during 2011-12
over the previous year. Among imports, petroleum
and petroleum products, food products, capital
goods, gold & silver, coal, coke & briquettes and
other bulk items, including fertilisers and
metalliferrous ores & metal scrap recorded higher
growth while growth of export related import
items showed a steep deceleration during the year.
During the year, POL products and gold & silver
together accounted for around 45 per cent of
Indias merchandise imports in 2011-12. Oil
imports at US$ 155 billion recorded an increase of
nearly 46 per cent over the years (as compared
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with an increase of 21.6 per cent in 2010-11).
Import of gold and silver at US$ 61.3 billion were
higher by 44.4 per cent in 2011-12 as compared
with 43.5 per cent recorded during the previous
year. Notably, predominant proportion of rise in
oil and gold imports has been on account of rise
in respective international prices (Crude Oil: 31
per cent and Gold: 27 per cent).
Trade Decit
Merchandise trade balance (on BoP basis) during
2011-12 worsened to US$ 189.7 billion from US$
130.4 billion recorded in the preceding year. In
terms of GDP, it increased from 7.7 per cent in
2010-11 to 10.3 per cent in 2011-12, one of the
highest in the world.
Services
Growth of services exports moderated to 7.1 per
cent during 2011-12 as compared with 37.5 per cent
during the previous year, while imports of services
declined by 7.3 per cent as against an increase of 39.4
per cent during the same period. This led to an increase
of 31.6 per cent in services exports in net terms during
2011-12 (34.4 per cent in 2010-11).
Moderation in the growth of the services receipts
was mainly on account of decline in nancial
services and decleration in growth rate of other
business services. Other services, viz., travel,
t r a n s p o r t a t i o n s , i n s u r a n c e a n d
telecommunications, computer & information
services also recorded some moderation in
growth.
Decline in services payments during 2011-12 as
against a sharp growth in 2010-11 was noticed in
construction services, computer services, research
& developmental services, professional &
management consultancy services, personal
cultural & recreational services and other services.
On the other hand, services payments on account
of travel, transport and insurance & pension
services recorded higher growth primarily on
account of weakening of rupee.
Exports of computer services, i.e., software
receipts at US$ 62.2 billion during 2011-12
recorded an increase of 12.2 per cent as compared
with a growth of 11.6 per cent a year ago.
Income
Primary income
Primary income balance, comprising compensation
of employees and investment income, improved
marginally during 2011-12 as compared with the
corresponding period of preceding year mainly due to
turnaround in the compensation of employees.
Investment income receipts during the year
declined by 3.9 per cent over the previous year
reecting lower interest/discount earnings on
foreign exchange reserves. Compensation of
employees, in net terms, however, showed a small
inow of US$ 0.5 billion in 2011-12 as against an
outow of US$ 0.9 billion during 2010-11.
Investment income payments at US$ 24.1 billion
stood marginally lower by 1.0 per cent in 2011-12.
Decline in investment income payments was
primarily on account of decline in reinvested
earnings of FDI companies reflecting falling
protability of Indian corporate sector. In contrast,
there was steep rise in the interest payments on
account of ECBs, trade credits, NRI deposits and
FII investment in debt securities. Higher interest
payment during the year may partly be attributed
to deregulation of interest rate on NRI rupee
deposits, increase in cap on FCNR deposits and
on ECB borrowings during the second half of the
year.
Nonetheless, improvement in receipts on account
of compensation of employees led to a marginal
improvement in net primary income as net
outow remained lower than the previous year.
Secondary Income
Net secondary income receipts that primarily
comprise private transfers recorded a robust
growth of 19.5 per cent to US$ 63.5 billion during
the year (US$ 53.1 billion a year ago).
NRI deposits, when withdrawn domestically, form
part of private transfers as they become unilateral
transfers and do not have any quid pro quo. During
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2011-12, the share of local withdrawals in total
outows from NRI deposits was at 62.0 per cent
as compared to 56.8 per cent in previous year
(Table 4).
Under private transfers, the inward remittances
for family maintenance accounted for 47.3 per
cent of the total private transfer receipts, while
local withdrawals accounted for 49.1 per cent
during 2011-12 (Table 5).
Current Account Balance
During the nancial year 2011-12, worsening trade
decit coupled with higher interest payments led
to increase in current account deficit despite
improvement in net services and secondary
income. The CAD during in 2011-12 stood at US$
78.2 billion as compared with US$ 46.0 billion
during 2010-11. As a percentage of GDP, CAD
amounted to 4.2 per cent during 2011-12 as
compared with 2.7 per cent recorded during the
same period of the preceding year.
Capital and Financial Account
Net inows under capital and nancial account
(excluding changes in reserve assets) at US$ 67.8
billion stood higher than that recorded in the
previous year (US$ 62.0 billion) primarily on
account of revival in FDI ows to India, surge in
NRI deposits and higher overseas borrowings by
banks. However, there was a decline in inows
under FII investments, ADRs/GDRs, external
assistance, ECBs and short term trade credit.
Capital Account
The capital account recorded a marginal decit of
US$ 61 million during 2011-12 as against a surplus
of US$ 40 million a year ago.
Financial Account
Net ows under the nancial account (excluding
changes in reserve assets) were higher during
2011-12 as compared with that in 2010-11
(Table 3).
Rise has been signicant in case of inward FDI
(benefiting from BP-Reliance deal of US$ 7.0
billion) which on net basis rose to US$ 33.0 billion
during 2011-12 from US$ 25.9 billion during
2010-11. Sector-wise, the increase in FDI inows
during the year was mainly led by ows under
manufacturing, construction, nancial services,
business services and communication services
(Table 6). Country-wise, investment routed
through Mauritius remained, as in the past, the
largest component, followed by Singapore and the
UK (Table 7).
FDI by India (i.e., outward FDI) in net terms
moderated by around 34 per cent to US$ 10.9
billion in 2011-12 (US$ 16.5 billion a year ago) due
to lower outows under both equity investment
and other capital (inter-company borrowings).
Sector-wise, moderation in outward FDI was
observed in agriculture, hunting, forestry &
shing, nancial insurance, real estate & business
services, manufacturing and wholesale, retail
trade, restaurants & hotels. Furthermore, sectors,
viz. nancial, insurance, real estate & business
services and manufacturing continued to account
Table 4: Inows and Outows from NRI Deposits
and Local Withdrawals
(US$ billion)
Year Inows Outows Local
Withdrawals
2009-10 (R) 41.4 38.4 23.3
2010-11 (PR) 49.3 46.0 26.2
2011-12 (P) 64.3 52.4 32.5
P: Preliminary. PR: Partially Revised. R: Revised.
Table 5: Details of Secondary Income
Receipts to India
(US$ billion)
Year Secondary
Income
Receipts
of Which:
Inward remittances
for family
maintenance
Local withdrawals/
redemptions of NRI
Deposits
Amount Percentage
Share in
Total
Amount Percentage
Share in
Total
2009-10 (R) 53.6 28.4 53.0 23.3 43.5
2010-11 (PR) 55.6 27.4 49.3 26.2 47.0
2011-12 (P) 66.1 31.3 47.3 32.5 49.1
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for more than 50 percent of total outward FDI
during 2011-12 (Table 6).
Direction-wise (i.e. in terms of recipient countries),
investment routed through Mauritius constituted
the largest component of gross outward FDI during
the period, followed by Singapore (Table 7).
With signicant improvement in FDI inows and
lower outward FDI, the net FDI (i.e., inward FDI
minus outward FDI) to India was signicantly
higher at US$ 22.1 billion in 2011-12 as compared
with US$ 9.4 billion in 2010-11.
During 2011-12, the outward FDI in joint ventures
(JVs) and wholly owned subsidiaries (WOSs) stood
at US$ 11.1 billion, around 33.2 per cent lower
than that during preceding year. During 2011-12,
investment nanced through equity recorded a
Table 6: Sector-wise FDI: Inows and Outows (US$ Billion)
(US$ billion)
Gross FDI inows to India# Gross FDI outows from India*
Industry 2010-11 2011-12 Industry 2010-11 2011-12
1 2 3 4 5 6
Manufacture 4.8 9.3 Financial, Insurance, Real Estate and Business Services 6.5 3.2
Construction 1.6 2.6 Manufacturing 4.9 3.2
Financial Services 1.4 2.6 Transport, Storage and Communication Services 0.8 2.0
Business Services 0.6 1.6 Wholesale, Retail Trade, Restaurants and Hotels 1.9 1.2
Communication Services 1.1 1.5 Agriculture , Hunting, Forestry and Fishing 1.2 0.5
Electricity and others 1.3 1.4 Construction 0.4 0.5
Restaurants and Hotels 0.3 0.9 Electricity, Gas and Water 0.1 0.0
Computer Services 0.6 0.7 Community, Social and Personal Services 0.7 0.4
Others 3.2 2.9 Miscellaneous 0.2 0.1
Total 14.9 23.5 Total 16.7 11.1
#: Includes equity FDI through SIA/FIPB and RBI routes only and hence are not comparable with data in other tables.
*: Includes equity (except that of individuals and banks), loans and guarantee invoked, and hence are not comparable with data in other tables.
Table 7: Country-wise FDI: Inows and Outows
(US$ billion)
Gross FDI inows to India# Gross FDI outows from India*
Country Apr-Mar Country Apr-Mar
2010-11 2011-12 2010-11 2011-12
1 2 3 4 5 6
Mauritius 5.6 8.1 Mauritius 5.1 2.6
Singapore 1.5 3.3 Singapore 4.0 2.2
UK 0.5 2.8 Netherlands 1.5 1.2
Japan 1.3 2.1 USA 1.2 1.0
Cyprus 0.6 1.6 British Virgin Islands 0.3 0.6
Netherlands 1.4 1.3 UK 0.4 0.5
U.S.A 1.1 1.0 UAE 0.9 0.4
France 0.5 0.6 Australia 0.2 0.3
Germany 0.2 0.4 Hongkong 0.2 0.3
UAE 0.2 0.3 Japan 0.0 0.2
Others 2.0 2.0 Others 2.9 1.7
Total 14.9 23.5 Total 16.7 11.1
#: Includes equity FDI through SIA/FIPB and RBI routes only and hence are not comparable with data in other tables.
*: Includes equity (except that of individuals and banks), loans and guarantee invoked, and hence are not comparable with data in other tables.
A RT IC LE
1492
sharper decline of 42.1 per cent compared to the
loan component which declined by 22.2 per cent
over a year ago. Accordingly, the share of equity
in total outward FDI fell to 47.8 per cent as
compared with 55.2 per cent in the preceding year
(Table 8).
FII investment ows remained volatile throughout
the year. On net basis, FII inows declined sharply
to US$ 16.8 billion during the year as compared
with a large inow of US$ 29.4 billion recorded
during preceding year.
Inows under currency and deposits by banking
sector (NRI deposits) witnessed a sharp rise of
more than 200 per cent and stood at US$ 11.9
billion as compared with an inow of US$ 3.2
billion a year ago. Such an impressive rise in NRI
deposits may be attributed to weakening of rupee
and deregulation of interest rate on NRI deposits
in the latter half of the year.
Net loans availed by non-Government and non-
banking sectors (net ECBs) were lower at US$ 9.1
billion as compared with US$ 12.2 billion in 2010-
11 primarily on account of a sharp rise in the
amortisation of ECBs during Q3 of 2011-12 due to
FCCB redemptions. Net inows under short-term
trade credit also moderated to US$ 6.7 billion
during the period from US$ 11.0 billion recorded
a year ago as the cost of short-term trade credit
rose and availability became difcult.
Net loans availed by banks more than doubled to
US$ 4.1 billion during the year partly due to rise
in their overseas borrowings.
Other receivables/payables that include leads
and lags in exports, SDR allocation, net funds
held abroad, advances received pending issue of
shares under FDI, rupee debt service and other
capital not included elsewhere recorded a lower
net outflow of US$ 6.9 billion in 2011-12 as
compared with a net outow of US$ 11.0 billion
in the corresponding period of preceding year
(Table 9). Leads & lags in exports also include
trade credit extended by Indian exporters to non-
residents.
Reserve Variation
There was a net drawdown of foreign exchange
reserves to the extent of US$ 12.8 billion during
Table 8: Indias Outward FDI
(US$ billion)
Period Equity* Loan Guarantees
Invoked
Total
2011-12 (P) 5.3 5.8 0 11.1
(47.8) (52.2) (0)
2010-11 (PR) 9.2 7.5 0 16.7
(55.2) (44.8) (0)
2009-10 (R) 10.6 4.2 0 14.8
(71.6) (28.4) (0)
*: The equity data do not include equity of individuals and banks.
Note: Figures in brackets relate to percentage share in total outward FDI
for the period.
Table 9: Details of Other Receivables/
Payables (Net)
(US$ billion)
Item 2009-10
(R)
2010-11
(PR)
2011-12
(P)
Lead and Lags in Exports -3.4 -8.8 -10.4
Net Funds Held Abroad -7.6 -5.4 -2.8
Advances Received Pending Issue of
Shares under FDI
3.1 6.9 2.7
SDR Allocation 5.2
Other capital not included elsewhere# -10.6 -3.8 3.6
Total (1 to 5) -13.3 -11.1 -6.9
#: Inclusive of derivatives and hedging, migrant transfers and other
capital transfers
P: Preliminary. PR: Partially Revised. R: Revised. -: Nil/NA.
1493
A RT IC LE
nancial year 2011-12 (Chart 4). In nominal terms
(i.e., including valuation changes), foreign
exchange reserves declined by US$ 10.4 billion
during the period reecting depreciation of US
dollar against the major international currencies.
At the end of March 2012, the level of foreign
exchange reserves stood at US$ 294.4 billion.
Difference between DGCI&S and Balance
of Payments Imports
The data on imports based on DGCI&S (customs
statistics) and the BoP (banking channel data) are
Table 10: DGCI&S and the BoP Import Data
(US$ billion)
Item April-March
2009-10 2010-11 2011-12
1 2 3 4
1. BoP Imports 300.6 381.1 499.5
2. DGCI&S Imports 288.4 369.8 488.7
3. Difference (1-2) 12.2 11.3 10.8
given in Table 10. The difference between the two
sets of data are likely to get reduced when both
the data sets would be later revised (Table 10).
A RT IC LE
1494
Attachment I : Invisibles by Category
( US$ million)
Items 2009-10 R 2010-11 PR 2011-12 P 2011-12
Apr-Jun PR Jul-Sep PR Oct-Dec PR Jan-Mar P
1 2 2 3 4 5 6 7
I. Invisibles Receipts ( A+B+C) 1,63,430 1,98,248 2,19,229 52,085 52,107 56,866 58,172
A. Services 96,045 1,32,880 1,42,325 34,055 32,643 37,552 38,075
1) Travel 11,859 15,275 18,462 3,697 4,235 5,068 5,462
2) Transportation 11,178 14,271 18,241 4,355 4,499 4,705 4,681
3) Insurance 1,591 1,948 2,632 569 629 799 635
4) GNIE 441 535 478 139 147 145 47
5) Miscellaneous 70,977 1,00,851 1,02,513 25,295 23,134 26,835 27,250
of which:
Software Services 49,705 55,460 62,212 14,950 13,940 16,123 17,199
B. Transfers 54,363 56,265 66,761 15,537 16,376 17,024 17,824
1) Ofcial Transfers 727 647 632 46 136 351 99
2) Private Transfers 53,636 55,618 66,129 15,491 16,240 16,673 17,725
C. Income 13,022 9,102 10,144 2,493 3,088 2,290 2,273
1) Investment Income 12,108 7,986 7,676 1,904 2,377 1,707 1,688
2) Compensation of Employees 915 1,116 2,468 589 711 583 585
II. Invisibles Payments ( A+B+C) 83,408 1,13,600 1,07,625 24,617 26,471 28,116 28,421
A. Services 60,029 84,064 78,227 17,637 18,651 21,385 20,554
1) Travel 9,343 11,108 13,762 3,461 3,534 3,530 3,238
2) Transportation 11,933 13,880 16,382 4,002 3,624 4,444 4,311
3) Insurance 1,285 1,400 1,497 298 423 440 337
4) GNIE 525 820 780 201 179 186 214
5) Miscellaneous 36,944 56,856 45,806 9,675 10,891 12,785 12,455
of which:
Software Services 1,468 2,194 1,256 302 307 317 329
B. Transfers 2,318 3,125 3,267 858 775 614 1,021
1) Ofcial Transfers 473 631 607 146 152 149 160
2) Private Transfers 1,845 2,494 2,660 712 622 465 861
C. Income 21,061 26,412 26,131 6,122 7,045 6,118 6,846
1) Investment Income 19,355 24,384 24,141 5,722 6,578 5,566 6,274
2) Compensation of Employees 1,705 2,028 1,991 400 467 551 572
Net Invisibles ( I II) 80,022 84,648 1,11,604 27,468 25,636 28,750 29,751
1495
A RT IC LE
Attachment I A: Invisibles Receipts by Category of Transactions
( US$ million)
Items 2009-
10 R
2010-11
PR
2011-
12 P
2011-12
Apr-Jun
PR
Jul-Sep
PR
Oct-Dec
PR
Jan-Mar
P
1 2 3 4 5 6 7
I. Invisibles Receipts ( A+B+C) 163430 198248 219229 52085 52107 56866 58172
A) SERVICES 96045 132880 142325 34055 32643 37552 38075
1) TRAVEL ACCOUNT
Tourist Expenses in India 11859 15275 18462 3697 4235 5068 5462
TOTAL 11859 15275 18462 3697 4235 5068 5462
2) TRANSPORTATION ACCOUNT
a ) Sea Transport
i) Surplus remitted by Indian companies operating abroad 609 649 731 205 219 162 145
ii) Operating expenses of foreign companies in India 788 765 753 275 187 139 152
iii) Charter hire charges 140 116 149 41 34 36 38
b) Air Transport
i) Surplus remitted by Indian companies operating abroad 420 530 801 153 193 177 277
ii) Operating expenses of foreign companies in India 66 56 113 38 39 28 9
c) Freight on exports 7967 10361 13073 3070 3217 3432 3354
d) Others 1177 1773 2612 573 607 726 706
TOTAL ( a to d) 11178 14270 18241 4355 4499 4705 4681
3) INSURANCE ACCOUNT
a) Insurance on export 1040 1354 1709 401 421 449 438
b) Premium
i) Life 46 50 147 29 45 44 29
ii) Non-life 99 124 160 30 44 52 35
iii) Reinsurance from foreign companies 212 126 172 29 33 90 21
c) Commission on Business received from foreign companies 24 33 59 7 20 22 9
d) Others 169 263 384 74 67 142 102
TOTAL ( a to d) 1591 1949 2632 569 629 799 635
4) Government Not Included Elsewhere
a) Maintenance of foreign embassies and diplomatic missions in India 279 387 344 100 112 98 34
b) Maintenance of international and regional institutions in India 162 147 134 39 35 47 13
TOTAL ( a to b) 441 534 478 139 147 145 47
5) MISCELLANEOUS ACCOUNT
a) Communication services 1229 1562 1601 360 390 456 395
b) Construction services 589 676 813 253 137 204 219
c) Financial services 3692 6508 5967 1282 1577 1613 1495
d) Software services 49705 55461 62212 14950 13940 16123 17199
e) News agency services 351 605 109 30 24 31 24
f) Royalties, copyright and license fees 202 193 281 40 78 78 85
g) Business services (i to xii) 11323 24049 25910 5780 6120 6807 7203
i) Merchanting services 316 1223 1352 332 348 300 372
ii) Trade related services 1688 5356 2882 748 716 700 718
iii) Operational Leasing Services 423 829 757 200 189 194 174
iv) Legal services 609 439 556 118 129 167 142
v) Accounting/Auditing services 224 301 474 81 106 157 130
vi) Business Management & consultancy services 3776 9184 9335 2040 2182 2210 2903
vii) Advertising/trade fair 568 703 774 224 171 192 187
viii) Research & Development services 565 878 819 161 187 207 264
ix) Architectural Engineering & other technical services 1380 2013 2750 642 693 828 587
x) Agricultural Mining & on-site processing services 196 286 78 35 16 17 10
xi) Maintanence of ofces abroad services 1507 2777 6040 1183 1358 1815 1684
xii) Environmental services 71 60 93 16 25 20 32
h) Personal, Cultural & Recreational services 527 227 406 86 120 67 133
i) Refunds/rebates 597 507 605 8 149 200 248
j) Other services 2762 11062 4609 2505 598 1256 249
TOTAL ( a to j) 70977 100850 102513 25294 23133 26835 27250
A RT IC LE
1496
Attachment I A: Invisibles Receipts by Category of Transactions (Concld.)
(US$ million)
Items 2009-10
R
2010-11
PR
2011-12
P
2011-12
Apr-Jun
PR
Jul-Sep
PR
Oct-Dec
PR
Jan-Mar
P
1 2 3 4 5 6 7
B) TRANSFERS (I + II) 54364 56265 66761 15538 16376 17024 17824
I) OFFICIAL TRANSFERS
i) Donations received from Non- residents 67 75 77 19 19 21 18
ii) Grant under PL 480 II 4 0 0 0 0 0 0
iii) Grants from other Governments 656 573 555 27 117 330 81
TOTAL ( i to iii) 727 648 632 46 136 351 99
II) PRIVATE TRANSFERS
i) Inward remittance from Indian workers abroad for family
maintenance etc.
28406 27408 31262 7372 7718 7912 8260
ii) Local withdrawals/redemptions from non-resident deposits 23288 26151 32471 7503 7930 8106 8932
iii) Gold and silver brought through passenger baggage 85 36 54 18 15 3 18
iv) Personal gifts/donations to charitable/religious institutions in India 1857 2023 2342 598 577 652 515
TOTAL (i to iv) 53636 55618 66129 15491 16240 16673 17725
C) INCOME ACCOUNT (I + II) 13023 9102 10144 2493 3088 2290 2273
I) Compensation of Employees
Wages received by Indians working on foreign contracts 914 1117 2468 589 711 583 585
II) Investment Income
i) Interest received on loans to non-residents 4138 1722 567 202 219 72 74
ii) Dividend/prot received by Indians on foreign investment 349 283 766 276 149 104 236
of which:
Dividend received by Indians on foreign investment 224 156 547 241 101 51 154
Prot received by Indians on foreign investment 125 127 219 35 48 53 82
iii) Reinvested Earning 1084 1084 1208 302 302 302 302
iv) Interest received on debentures,FRNs,CPs, xed deposits and
funds held abroad by ADs out of foreign currency loans/export
proceeds
57 42 405 150 85 126 44
v) Interest received on overdraft of VOSTRO accounts of foreign
correspondents/branches by the ADs
16 12 25 7 13 3 2
vi) Payment of taxes by the non-residents/refund of taxes by foreign
governments to Indians
554 681 615 152 293 100 70
vii) Interest/discount earnings etc. earnings on RBI investment 5900 4142 4063 811 1304 994 954
viii) Interest/remuneration on SDR holdings 10 20 27 4 11 6 6
TOTAL ( i to viii) 12108 7986 7676 1904 2377 1707 1688
1497
A RT IC LE
Attachment I B: Invisibles Payments by Category of Transactions
( US$ million)
Items 2009-10
R
2010-11
PR
2011-
12 P
2011-12
Apr-Jun
PR
Jul-Sep
PR
Oct-Dec
PR
Jan-Mar
P
1 2 3 4 5 6 7
Invisibles Payments ( A+B+C) 83408 113600 107625 24617 26471 28116 28421
A) SERVICES (I to V) 60030 84064 78227 17637 18651 21385 20554
I) TRAVEL ACCOUNT
i) Business 3569 4978 7297 1847 1650 1921 1879
ii) Health Related 29 59 36 10 11 7 7
iii) Education Related 2252 1892 1864 330 631 467 436
iv) Basic travel quota ( BTQ) 2336 2780 2800 895 733 602 571
v) Pilgrimage 232 309 510 48 210 201 51
vi) Others 924 1090 1255 331 299 332 294
TOTAL ( i to vi) 9342 11108 13762 3461 3534 3530 3238
II) TRANSPORTATION ACCOUNT
a. Sea Transport
i) Surplus remitted by Foreign companies operating in India 1209 1771 2961 805 797 704 655
ii) Operating expenses of Indian companies abroad 1670 962 1056 312 311 231 202
iv) Freight on imports 3265 4186 3848 996 905 999 948
v) Freight on Exports 1019 1119 1237 436 253 266 283
vi) Remittance of passage booking abroad 6 11 10 8 1 0 0
b. Air Transport
i) Surplus remitted by Foreign companies operating in India 2452 3120 2457 794 619 485 559
ii) Operating expenses of Indian companies abroad 603 923 867 234 227 199 208
iv) Freight on imports 112 152 176 34 39 43 60
v) Freight on Exports 23 50 31 3 8 4 17
vi) Remittance of passage booking abroad 38 41 56 10 17 12 17
c. Others 930 961 3187 238 318 1374 1257
TOTAL ( a to c) 11934 13880 16382 4002 3624 4444 4311
III) INSURANCE ACCOUNT
a. Premium
i) Life 25 15 11 2 4 1 4
ii) Non-life 117 128 88 19 25 26 18
iii) Reinsurance 653 750 824 198 220 243 163
b. Commission on Business 58 65 73 18 33 6 16
c. Others 432 442 501 61 140 164 137
TOTAL ( a to c) 1285 1400 1497 298 423 440 337
IV) Government Not Included Elsewhere
a. Maintenance of Indian embassies and diplomatic mission abroad 358 531 460 115 101 122 122
b. Remittances by foreign embassies and mission in India 167 288 320 86 78 64 92
TOTAL ( a to b) 525 819 780 201 179 186 214
V) MISCELLANEOUS ACCOUNT
a) Communication services 1355 1152 1556 415 309 341 491
b) Construction services 998 1157 1002 203 315 155 329
c) Financial services 4643 7483 7985 1764 2130 2189 1902
d) Software services 1469 2195 1255 302 307 317 329
e) News agency services 639 467 517 194 87 112 124
f) Royalties, copyright and license fees 2017 2424 3208 606 693 919 990
g) Business services (i to xii) 18050 27763 26791 5914 6352 6951 7574
i) Merchanting services 496 1068 1321 211 331 241 538
ii) Trade related services 1772 1878 2427 590 545 395 897
iii) Operational Leasing Services 907 1236 1168 338 250 282 298
iv) Legal services 193 158 224 46 48 65 65
v) Accounting/Auditing services 179 274 210 77 37 46 50
vi) Business Management & consultancy services 5376 10613 10224 2022 2394 2994 2814
vii) Advertising/trade fair 792 945 982 211 280 243 248
viii) Research & Development services 319 249 223 48 26 91 58
ix) Architectural Engineering & other technical services 4252 5127 4871 1092 1262 1416 1101
x) Agricultural Mining & on-site processing services 191 131 64 11 17 17 19
xi) Maintanence of ofces abroad services 3573 6072 5066 1267 1160 1157 1482
xii) Environmental services 3 12 11 1 2 4 4
h) Personal, Cultural & Recreational services 260 543 275 80 78 48 69
i) Refunds/rebates 473 641 808 111 266 176 255
j) Other services 7040 13031 2409 86 354 1577 392
TOTAL ( a to j) 36944 56856 45806 9675 10891 12785 12455
A RT IC LE
1498
Attachment I B: Invisibles Payments by Category of Transactions (Concld.)
( US$ million)
Items 2009-10
R
2010-11
PR
2011-12
P
2011-12
Apr-Jun
PR
Jul-Sep
PR
Oct-Dec
PR
Jan-Mar
P
1 2 3 4 5 6 7
B) TRANSFERS (I + II) 2318 3125 3267 858 775 614 1021
I) OFFICIAL TRANSFERS
Grants/donations from ofcial sector 473 631 607 146 152 149 160
TOTAL 473 631 607 146 152 149 160
II) PRIVATE TRANSFERS
i) Remittance by non-residents towards family maintenance and
savings
1515 2078 2270 588 530 396 756
ii) Personal gifts/donations to charitable/religious institutions 329 415 390 123 93 69 105
of which:
Remittance towards personal gifts and donations 286 405 372 114 91 67 100
Remittance towards donations to religious and charitable
institutions abroad
41 9 15 8 1 2 4
Remittance towards grants and donations to other governments
and charitable institutions established by the governments
2 1 3 1 1 0 1
TOTAL ( i to ii) 1844 2493 2660 712 622 465 861
C) INCOME (I + II) 21061 26412 26131 6122 7045 6118 6846
I) Compensation of Employees
Payment of wages/salary to Non-residents working in India 1705 2027 1990 400 467 551 572
TOTAL 1705 2027 1990 400 467 551 572
II) Investment Income
i) Payment of interest on NRI deposits 1599 1737 2312 503 531 567 711
ii) Payment of interest on loans from non-residents 4165 5071 7904 1831 1762 1895 2416
iii) Payment of dividend/prot to non-resident share holder 3810 4681 4861 1167 2075 789 830
of which:
Payment of dividend to non-resident share holder 3208 4337 4541 1076 1947 725 793
Payment of prot to non-resident share holder 602 344 320 91 128 64 37
iv) Reinvested Earning 8668 11940 8204 2051 2051 2051 2051
v) Payment of interest on debentures,FRNs, CPs xed deposits,
Government securities etc.
227 320 216 47 48 77 44
vi) Charges on SDRs 9 19 22 7 4 5 6
vii) Interest paid on overdraft on VOSTRO a/c Holders/OD on
NOSTRO a/c
656 397 222 23 28 146 25
viii) Payment of taxes by the Indians/refund of taxes by government
to non-residents
221 219 399 93 79 36 191
TOTAL ( i to viii) 19355 24384 24140 5722 6578 5566 6274

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