Oil imports widen current account gap

Mumbai, Dec 29 | Updated: Dec 30 2006, 05:30am hrs
Despite of the huge invisible surplus worth of $11 billion, the countrys current account witnessed a deficit for the July- September quarter.

The current account deficit for the second quarter was recorded at $6.928 billion as compared to $3.578 billion in the corresponding quarter of the previous year, indicating a rise in deficit by 93%, said a Reserve Bank of India (RBI) press release on Friday.

Further, the release stated that the deficit was due to large trade deficit mainly on account of oil imports. In the previous quarter ended on June 2006, the current account depicted a deficit of $4.75 billion.

The exports of the country grew by $30.87 billion, indicating a growth of 22% in the second quarter, as compared with the robust growth of 33.8% in the corresponding quarter of the previous year.

As per the data released by DGCI&S, the deceleration in exports growth was mainly due to slowdown in exports of manufactured goods. Even the import payments showed moderate growth during the July- September quarter by $48.80 billion, indicating growth 27.1% as against 34.5% in the corresponding quarter of 2005-06.

Oil imports reflected the impact of hardening price of the Indian basket of international, which rose to $66.8 per barrel in Q2 of 2006-07 from $49.3 per barrel in the corresponding quarter of the previous year. Maintaining the pace of growth in business and professional services, software services and remittances, invisible receipts rose by 32.8% during the reporting period.

Dome Of Deficit

Exports grew by $30.87 bn, indicating a growth of 22%
FDI for the H1 of the FY 2006 increased to $4.2 bn
CB also increase to $5.09 billion in April-September 2006

Meanwhile, the capital account for the quarter ended September 2006 showed a surplus of $9.19 billion as against $8.83 billion for the corresponding quarter of previous year.

During the first half of the financial year 2006-07 under net capital flows, external commercial borrowings (ECBs), foreign direct investment (FDI), and NRI deposits and short-term trade credit showed robust growth.

FDI for the first half of the financial year 2006 increased to $4.2 billion as compared to $2.12 billion in the corresponding period last year. Net FDI into India accelerated on the strength of sustained domestic activity and positive investment climate with inflows channeling into manufacturing, business and computer services.

Outward FDI remained on track as reflecting the appetite of Indian companies for global expansion in terms of markets and resources.