However, the current account depicted a surplus of $ 1.8 billion in the previous quarter ended on March 2006.
The exports of the country posted a growth of 17% in the first quarter of the current fiscal as compared with the robust growth of 35.4% in the corresponding quarter of the previous year.
Even the import payments showed a moderate growth during the April -June quarter by growing at 23.8% as against 64.5% in the corresponding quarter of 2005-06. The growth in imports has outstripped the pace of export growth, said RBI.
The merchandise trade deficit increased to $18.5 billion in first quarter of 2006-07 as compared to $13.6 billion in the corresponding quarter of the previous year.
Maintaining the pace of growth in travel earnings, business and professional services, software services and remittances, invisible receipts rose by 22.6% during the reporting period.
On the other hand, invisible payments grew at 21.9% partly reflecting continuing pace of outbound tourist traffic from India and rising payments towards transportation.
Meanwhile on the capital account front, net inflows under external commercial borrowings (ECB), foreign direct investment and banking capital recorded steady increase resulting in higher net capital flows.
The banking capital for the reporting period was recorded $5.079 billion as against $782 million in the corresponding quarter of the previous year. The increase in banking capital was on account of higher inflow under NRI deposits and drawn of foreign assets of commercial banks. During the first quarter of 2006-07 the accretion to foreign exchange reserves at $ .4 billion was higher than $1.2 billion recorded during the corresponding quarter of the previous year.
Taking into account the valuation gain of $4.9 billion, foreign exchange reserves recorded an increase of $11.3 billion during April-June 2006 as against a decline of $3.1 billion during Q1 of 2005-06.