Eco Survey 2020-21: India likely to post current account surplus after 17 years
India is likely to post a current account surplus after a gap of 17 years, at 2 per cent of GDP during 2020-21, on back of resilient software services export, said the Economic Survey tabled in Parliament on Friday.
India’s current account deficit averaged 2.2 per cent of gross domestic product (GDP) in the last 10 years.
However, reversing this trend, current account balance turned into surplus (0.1 per cent of GDP) in fourth quarter 2019-20 on the back of, among others, a lower trade deficit and a sharp rise in net invisible receipts.
This quarterly surplus was registered after a gap of 13 years after fourth quarter of fiscal 2006-07. This has been followed by successive current account surpluses in first and second quarters of the current fiscal.
In the first half of 2020-21, steep contraction in merchandise imports and lower outgo for travel services led to a sharper fall in current payments (by 30.8 per cent) than current receipts (15.1 per cent), leading to a current account surplus of USD 34.7 billion (3.1 per cent of GDP)
“Given the trend in imports of both goods and services, it is expected that India will end with an annual current account surplus of at least 2 per cent of GDP after a period of 17 years,” said the survey for 2020-21.
India, being a developing and emerging market economy, typically runs a deficit on the current account to supplement domestic savings with foreign savings to fund higher investment, it said.
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