Service Sector Pushing Remittances in India,says RBI
An increase in remittances in India has helped the country to
reduce its current account deficit for the third quarter of 2007.
Current account measures the quantum of both trade and services
that India has with the other countries.
The current account deficit stood at USD3 billion for the third
quarter ended Dec 31, 2006 against $4.7 billion in the corresponding
period in 2005. For the period between April-December 2006, the
current account deficit was at about USD12 billion. The values
have shown no significant change since the previous corresponding
period, as per the data showcased by Reserve Bank of India (RBI).
Since, India is more into importing the things than exporting;
it led to the trade balance to fall. Imports during the quarter
were evaluated to be at the same level. A drop in exports whereas
a growth in oil imports and other products such as capital goods
including gems, stones, gold, and other metallic ores contributed
to increasing the gap between exports and imports.
However, the receipts from services shoot up to USD16 billion
for the quarter of 2005 whereas imports marked the growth rate
by 25% in this quarter as against 17% in corresponding period
in 2005.
Talking about net software earnings for the period between April
to December 2006, it was nearly USD20 billion against USD15.5
billion in the corresponding period in 2005. Software earnings
accounted for half the receipts on the ‘invisibles’ head in India’s
current account.
Capital flows (comprising mainly of External commercial borrowings
(ECBs), NRI deposits, foreign direct investment and portfolio
inflows) into the country rose to USD10.5 billion during this
quarter compared with less than USD 0.1 billion in the corresponding
period. However, the low figure of the previous fiscal is explained
by the outflow of USD5.5 billion that took place in Dec 2005 to
repay the Millennium Deposit of the State Bank of India.
Photo: Indian 50-rupees banknote closeup (68912) by Sohel Patel, licensed under CC0, via Wikimedia Commons.
