July Capital Account Surplus Reverses First Quarter Deficit at $27.7 Billion
GS3Economy · S&T · Environment · Security· Growth, inflation & macro indicators· Prelims·
Balance of Payments dynamics and RBI's dollar-mobilisation role: a key GS3 Economy topic.
Why in news
The RBI's dollar-mobilisation programme contributed to a $27.7 billion capital account surplus in July, reversing the first quarter deficit.
Background
India's capital account surplus for April-July reached $23.9 billion, an increase from $11.4 billion in the previous year. While FDI inflows were $7.3 billion and portfolio investments were $4.1 billion, merchandise trade deficit rose to $117.8 billion for the first four months of the fiscal year.
Facts for Prelims
- FactJuly capital account surplus: $27.7 billion
- FactApril-July capital account surplus: $23.9 billion
- FactJuly FDI inflows: $7.3 billion
- FactJuly portfolio investments: $4.1 billion
- FactFirst four months merchandise trade deficit: $117.8 billion
Prelims practice question
With reference to India's capital account and trade data, consider the following statements:
- Foreign Direct Investment (FDI) inflows in July were recorded at $4.1 billion.
- The capital account surplus for the April-July period reached $23.9 billion.
- The merchandise trade deficit for the first four months of the fiscal year rose to $117.8 billion.
Which of the statements given above is/are correct?
- (a)3 only
- (b)1 and 3 only
- (c)2 and 3 only
- (d)1, 2 and 3
Show answer
Answer: (c) 2 and 3 only — Statements 2 and 3 are correct. Statement 1 is incorrect: July FDI inflows were $7.3 billion.
For Mains
Q. Analyze the impact of the RBI's dollar-mobilisation programme on India's Balance of Payments and its role in managing external shocks.
Dimensions to cover in your answer
- Monetary intervention: RBI's role in stabilizing forex reserves against volatile capital flows
- Trade-Capital mismatch: Rising merchandise trade deficit vs. capital account surpluses
- Investment dynamics: Shift in portfolio investment trends vs. external commercial borrowing outflows
Keywords: Balance of Payments · Capital Account · Foreign Direct Investment · Portfolio Investment · Merchandise Trade Deficit · Dollar Mobilisation
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This note is generated automatically from SatyaDheesh's news feed and mapped to the UPSC CSE syllabus. Check facts against the original report or PIB before using them in an answer.