India’s current account balance, the value of exports and imports of both goods and services, ended in a record surplus of $19.8 billion, or 3.9% of GDP, during the quarter ended June, exceeding the expectations of economists, as merchandise trade contracted with a slump in crude oil consumption due to the lockdown, and income from services stayed stable.
The surplus compares with a deficit of $15 billion, or 2.1% of GDP, a year earlier, according to preliminary figures released by the Reserve Bank of India.
“The surplus in the current account in Q1 of 2020-21 was on account of a sharp contraction in the trade deficit to $10 billion due to steeper decline in merchandise imports relative to exports on a year-on-year basis,” the RBI said in a statement.
Net services receipts remained stable, primarily on the back of net earnings from computer services. Private transfer receipts, mainly remittances sent home by Indians employed overseas, were $18.2 billion, a fall of 8.7% from their level a year ago, better than market expectations.
A current account surplus when an economy is contracting is not perceived to be healthy because it points to a sharp slowdown in domestic consumption.