New Delhi [India], December 30 (ANI): India’s Balance of Payments (BoP) saw a significant improvement in the second quarter driven by strong inflows from Foreign Portfolio Investments (FPIs), External Commercial Borrowings (ECBs), and Non-Resident Indian (NRI) deposits, according to a report by Bank of Baroda.
The report highlighted a notable increase in the capital account surplus, which rose to USD 11.9 billion in Q2 FY25 from USD 10.3 billion in Q2 FY24.
It said “India’s balance of payments recorded an accretion of USD 18.6bn in Q2 FY25, compared with USD 2.5bn in Q2 FY24. This was supported by robust inflows from FPIs, ECBs and NRI deposits”.
Despite an increase in Foreign Direct Investment (FDI) outflows to USD 2.2 billion this quarter, compared to USD 0.8 billion in the corresponding period last year, other components of the capital account showed remarkable growth.
The report also mentioned that the FPI inflows were a key contributor, surging to USD 19.9 billion in Q2 FY25 from USD 4.9 billion in the same period a year ago. Similarly, inflows into NRI deposits more than doubled, reaching USD 6.2 billion, up from USD 3.2 billion in Q2 FY24.
Net inflows from ECBs also rebounded strongly, recording USD 5 billion in Q2 FY25, a significant turnaround from the net outflows of USD 1.9 billion observed in the same quarter last year.
The report attributed these trends to improved investor confidence and favorable global financial conditions, which have bolstered India’s external position.
Despite challenges in other areas of the economy, such as the current account deficit and trade balance pressures, these capital inflows have provided critical support to India’s BoP.
Overall, the robust performance of FPIs, ECBs, and NRI deposits has helped strengthen India’s external finances, with the BoP recording a substantial surplus in the last quarter. This development underscores the resilience of India’s external sector in navigating global economic uncertainties. (ANI)
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