Current account surplus at $1.9 bn in April-June

India has posted a current account surplus of $1.90 billion for the quarter ended June 2004 as against a deficit of $637 million in the corresponding quarter of the previous year even as the trade account is running a deficit of $6.3 billion "" the highest ever in any quarter so far.

The figures, released by the Reserve Bank of India today, showed that while exports have grown from $13 billion to $16 bn, imports surpassed at $23 bn from $18 bn last quarter.

However, the current account ran into surplus with almost double growth in invisibles from $4.9bn to $8.1bn.

Invisible receipts remained buoyant by remittances from expartriate Indians, software exports and travel earnings, net capital flows at $5.6 bn ($ 6.1bn last quarter) was driven by external commercial borrowings, short-term trade credits on account of substantially higher crude oil imports and foreign direct investment.

Current account surplus consists of a growth of 20 per cent in foreign investment, 16.9 per cent rise in short-term credit and valuation loss in reserves of $1 billion .

Valuation loss reflected the depreciation of the euro, the pound and the yen against the dollar, which accounted for a decline of $1 billion in the total reserves during the quarter.

However, net outflows were recorded by foreign institutional investors reflecting subdued appetite for Asian markets .

There was albeit a marginal net inflow under portfolio investment due to ADRs/GDRs. NRI deposits registered a net outflow of $800 million as against an accretion of 41.8 bn last quarter.

As regards the sustainability of external debt, the ratio of short term debt to total debt posted amodest rise from 4.2 per cent to 5.2 per cent whereas the foreign exchange reserves exceeded the external debt by $6.9 bn providing the cover of 106.1 per cent to the external debt stock at the end of June 2004.

At $112.6 bn at the end of June 2004, India's total external debt increased marginally by $121 million in end march 2004.