Balance of payments swing to surplus: RBI

Reserve Bank of India figures indicated that India returned to a surplus of $19.1 billion for October-December.

As the general elections are set to kick off on April 7. polls have shown Congress losing support because of concerns about its economic management and corruption scandals. The latest data will help in improving the image the Congress party in the April polls next month.

"We will get about two percent current account (deficit) as a percentage of GDP (for the fiscal year ending March 2015), but it is still early days because it is very contingent now on the outcome of the election and the policies that are followed after that," said Saugata Bhattarcharya, Chief Economist at Axis Bank.

Gold imports slumped to $3.1 billion in the December quarter, compared to $17.8 billion last year, improving the balance of payments.The current account deficit hit a record high of 4.8 percent of GDP in the year ended in March 2013. Since then, foreign investors have returned, allowing the rupee to rebound 11.5 percent from a record low of 68.85 in late August.

Foreign institutional investors have bought a net $484.2 million in the Indian shares of 2014.The gold import curbs also helped narrow India's trade deficit in the October-December period to $33.2 billion.

"I don't expect any risks to emerge on the current account deficit. Because even if the gold curbs are eased, this will likely be done very gradually to ensure the current account is not hit," said Siddhartha Sanyal, Economist at Barclays, India.

While the capital and financial account surplus fell sharply to $4.8 billion versus $30.8 billion of 2103, economists expect foreign investors to remain strong buyers.