Mumbai, April 1: The Reserve Bank of India (RBI) has said software services and tourism aided in doubling the country’s current account surplus to $1.8 billion in the third quarter of 2003-04 over the same period last year.

On the other hand, the balance of payment surplus jumped to $7.2 billion in October-December, up from $6.1 billion in the year-ago period due to increased foreign inflows. The balance of payment surplus was at $8.4 billion in the preceding quarter of 2002-03.

According to the data released by the central bank late Thursday, within the current account, the merchandise trade deficit widened to $5.6 billion from $4.2 billion in the previous quarter (July-September 2003) and $4.4 billion in October-December, 2002.

The higher trade deficit in October-December, 2003, reflected a strong pick up in import payments in relation to the previous quarters of the year, the RBI added.

While export growth was robust in December, it partially offset the rise in import payments during the quarter.

The invisible account recorded a net surplus of $7.4 billion in the third quarter of 2003-04 against $5.8 billion in the previous quarter and $5.3 billion in October-December, 2002.

Earnings from software services, including business process outsourcing (BPO), were pegged at $3.47 billion in the third quarter compared with $2.92 billion in the second. On the other hand, receipts from the tourism sector more than doubled to $453 million against $223 million in the second quarter.

“Gross invisible receipts were on the rise, mainly due to continuing growth of inward remittances recorded under private transfers, resilience of software exports recorded in the miscellaneous account and a surge in earnings from tourism,” the RBI added.

Investment income payments surged in the quarter due to interest payments relating to the redeemed Resurgent India Bonds (RIBs).

Regarding the capital account, the central bank divulged that net capital flows fell to $5.9 billion in October-December from $6.1 billion in the previous quarter due to prepayment of multilateral and bilateral debt by the government ($2 billion) and redemption of RIBs ($4.2 billion, excluding accrued interest).

However, net foreign investment inflows reached their highest level in the third quarter at $5.0 billion compared with the preceding quarters due to portfolio inflows of $4.1 billion from foreign institutional investors (FIIs).

Further net inflows of foreign direct investment remained stable broadly at the level of the previous quarters at $1 billion. In April-December, the trade deficit at $15 billion widened sharply compared with $ 9.8 billion in the corresponding period of 2002-03.

Here too, net invisible earnings grew to $18.2 billion which more than offset the trade deficit. This resulted in the current account recording a surplus of $3.2 billion over $2.9 billion in April-December 2002.

Rise in forex

The Reserve Bank has also revealed that inflows from foreign institutional investors (FIIs) and deposits from non-resident Indians (NRIs) mainly contributed to a rise in the country’s foreign exchange reserves in April-December. The reserves increased by $26 billion against $16 billion in the same period of 2002.

The central Bank said the major sources of accretion to foreign exchange reserves in April-December 2003 were foreign investment at 38.3 per cent. This comprised FDI (9.5 per cent) and portfolio investment (28.8 per cent). Banking capital, which includes NRI deposits, were at 13.3 per cent. Changes in foreign assets and other liabilities of commercial banks stood at 8.0 per cent and short-term credit at 9.1 per cent.