BoP slips to negative zone in Q2

The balance of payment (BoP) slipped into negative zone - for the first time in 15 quarters - in the July-September quarter to $634 million as against a surplus of $7.52 billion in the first quarter of the current fiscal due to rising crude import bill.

While exports slowed down to $16.262 billion in Q2FY05 from $18.189 billion in the first quarter, imports moved up to $28.563 billion from $23.329 billion, according to data released by the RBI today. Trade deficit thus more than doubled to $12.301 billion from $5.14 billion in the previous quarter.

The current account showed a deficit of $6.419 billion in the period under review when compared with a surplus of $3.159 billion in Q1FY05. It was the first current account deficit since Q2FY04, the release said.

"Imports of crude petroleum and products were the key drivers of the surge in import payments," the release said. Non-oil imports have also been on the rise as industrial activity gains momentum, the release added.

"Developments in the current and capital accounts of the BoP resulted in a draw down of the foreign exchange reserves of the order of $634 million, excluding valuation effects, after 15 quarters. Over the first half of 2004-05, however, there was an accretion to the reserves of $6.9 billion, excluding valuation changes. At $119.6 billion at the end of September 2004, India held the sixth largest stock of reserves in the world," the release said.