The Central Bank, on Monday released the data on India’s balance of payments (BoP) for the fourth quarter (Q4) of the financial year 2023-24.
India’s foreign exchange reserves experienced an increase during the financial year 2023-24.
According to the RBI, the forex reserves in nominal terms, including valuation effects, surged by USD 68.0 billion.
The surplus is 0.6 percent of GDP in Q4 of FY24 as against a deficit of US$ 8.7 billion (1.0 percent of GDP in Q3 of FY24.
This is a marked improvement compared to the previous fiscal year, which saw a decline of USD 28.9 billion.
Factors that buoyed the BoP mterics
The primary drivers of this increase included a significant rise in foreign portfolio investment and banking capital.
Foreign portfolio investment saw a net inflow of USD 44.1 billion in 2023-24, a shift from the outflow of USD 5.2 billion in the previous year.
Banking capital also contributed notably with an inflow of USD 40.5 billion, up from USD 21.0 billion in 2022-23.
Current Account and Capital Account
The current account deficit (CAD) in 2023-24 narrowed to USD 23.2 billion (0.7% of GDP) from USD 67.0 billion (2.0% of GDP) in 2022-23. This reduction was primarily due to a lower merchandise trade deficit and higher net invisibles receipt, which includes services and transfers.
For Q4 of 2023-24, the current account balance turned into a surplus of USD 5.7 billion, a significant improvement from a deficit of USD 1.3 billion in the same quarter the previous year. The merchandise trade deficit narrowed slightly, while services exports and private transfer receipts saw notable increasesQ4 Metrics:
