India’s Current Account Balance Turns Surplus in Q4FY24

Mumbai: India’s current account balance recorded a surplus of $ 5.7 billion (0.6 per cent of GDP) in the fourth quarter (Q4) of FY24 due to higher service exports and private transfer receipts, according to data released by the Reserve Bank of India (RBI). The current account balance has turned surplus after a gap of ten quarters.

The current account balance was in deficit of $ 8.7 billion (one per cent of GDP) in Q3 2023-24 and $ 1.3 billion (0.2 per cent of GDP) a year ago [i.e. Q4:2022-23]. “Services exports grew by 4.1 per cent on a y-o-y basis in Q4:2023-24 on the back of rising exports of software, travel and business services. Net services receipt at US$ 42.7 billion was higher than its level a year ago (US$ 39.1 billion), which contributed to the surplus in the current account balance during Q4:2023-24,” said the RBI.

India’s current account deficit moderated to more than half at $ 23.2 billion (0.7 per cent of GDP) during 2023-24 from $ 67 billion (2 per cent of GDP) during the previous year on the back of a lower merchandise trade deficit. The current account deficit is a measurement of a country's trade where the value of the goods and services it imports exceeds the value of the products it exports.

The RBI Deputy Governor Swaminathan J on Monday said that State Level Bankers' Committees (SLBC) can play a more effective role in financial inclusion through better coordination with government and NGOs in credit planning and promoting digital financial literacy. "By focusing on effective coordination with government and NGOs, adopting a scientific approach to credit planning, and emphasising digital financial literacy, SLBCs can create a more inclusive financial ecosystem," he said at the Conference of Convenors of SLBCs at Pune.

As part of aspirational goals for RBI's centenary, referred to as RBI@100, he said, among these targets are deepening financial inclusion and expanding credit availability.

In another development, the RBI’s Monetary Policy Committee external member Jayanth Varma reiterated his views for a 25 basis points rate cut. Varma said that the retail inflation is nearing the RBI's target of 4 per cent and the monetary policy needs to shift focus on promoting growth. He further said that the CPI inflation in 2024-25 is projected to be only about 0.5 percentage points above the target, and core inflation is extremely benign. Varma, a professor at the Indian Institute of Management (IIM, Ahmedabad) noted that the fight against inflation has understandably come at a cost to growth.

Economic growth in 2024-25 is estimated to be 0.75-1 percentage points lower than the 8.2 per cent growth in 2023-24, he said adding India's potential growth is about 8 per cent.