India’s balance of payments surplus climbed more than 12-fold to $29.2 billion during the second quarter of this fiscal against just $2.3 billion in the year-ago period on higher foreign inflows, services exports and remittances by non-residents.

Surplus in India’s Balance of Payments (BoP), which represents flow of money in and out from the country, stood at $11.2 billion in the first quarter of this fiscal.

Backed by remittances from overseas Indians, exports of software and other professional services, India’s current account deficit declined to $5.5 billion in the second quarter of this fiscal against $6.3 billion in the year ago period, despite widening of trade deficit.

Trade deficit represents gap between exports and growth, while current account deficit also comprises flow of various services between two nations, technically called invisibles. Maintaining the pace of growth in remittances, software exports and other professional services, invisible receipts recorded a growth of 29.1 per cent in Q2 as against 30.6 per cent in the same period of last fiscal.

Domestic demand

Invisible payments reflected outbound tourist traffic from India, rising payments toward transportation, domestic demand for business related services and higher investment income payments in the form of interest and dividends.

India had a surplus of Rs 16,145 crore from invisibles in the second quarter against Rs 10,482 crore a year ago.

With deceleration in export growth and higher non-oil imports, India’s trade deficit was higher at $21.7 billion in the second quarter against $16.8 billion in the second quarter of 2006-07, according to RBI data. Net portfolio investment at $10.9 billion in Q2 against $2.2 billion in the second quarter of the last fiscal was the largest component of capital flows.