<p>India recorded its largest ever current account surplus of $19.8 billion or 3.9% of GDP in the April-June quarter as imports shrank more than exports in the period that coincided with the worst Covid-related lockdown.</p>.<p>The capital account receipts such as foreign direct investment and external commercial borrowings among other, which normally support the current account deficit, were much lower with a surplus of only $552 million against $28.6 billion last year in the same period.</p>.<p>The CAD surplus at the time of slowing economy and rising import curbs could severely impact consumption and point to looming recession.</p>.<p>“The big boost to the current account surplus ratio, expressed as percentage of GDP came from the decline in nominal GDP by around 23% in April-June period which lowered the denominator. Quite clearly, the balance of payments was held together by the current account surplus,” said Madan Sabnavis, chief economist of Care Ratings.</p>.<p>Within capital receipts, with the exception of NRI deposits which maintained their level, FDI and ECBs were lower.</p>.<p>Care Ratings said going by the trends seen in July and August, we may expect a surplus to prevail in the second quarter too and with GDP poised to decline in this quarter once again, we can expect a current account surplus in the range of 2-3% this quarter.</p>.<p>“The current account surplus in Q1 FY2021 was well above our expectations, as the fall in remittances was remarkably muted, despite the adverse economic conditions globally amid the ongoing pandemic," said Aditi Nayyar, chief economist at ratings firm Icra. </p>.<p>With the domestic and global lockdowns to fight Covid-19 exuding a differentiated impact on exports and imports, the merchandise trade deficit shrunk to just $10.0 billion in Q1 FY2021, most of which was accounted for by the net oil balance</p>
<p>India recorded its largest ever current account surplus of $19.8 billion or 3.9% of GDP in the April-June quarter as imports shrank more than exports in the period that coincided with the worst Covid-related lockdown.</p>.<p>The capital account receipts such as foreign direct investment and external commercial borrowings among other, which normally support the current account deficit, were much lower with a surplus of only $552 million against $28.6 billion last year in the same period.</p>.<p>The CAD surplus at the time of slowing economy and rising import curbs could severely impact consumption and point to looming recession.</p>.<p>“The big boost to the current account surplus ratio, expressed as percentage of GDP came from the decline in nominal GDP by around 23% in April-June period which lowered the denominator. Quite clearly, the balance of payments was held together by the current account surplus,” said Madan Sabnavis, chief economist of Care Ratings.</p>.<p>Within capital receipts, with the exception of NRI deposits which maintained their level, FDI and ECBs were lower.</p>.<p>Care Ratings said going by the trends seen in July and August, we may expect a surplus to prevail in the second quarter too and with GDP poised to decline in this quarter once again, we can expect a current account surplus in the range of 2-3% this quarter.</p>.<p>“The current account surplus in Q1 FY2021 was well above our expectations, as the fall in remittances was remarkably muted, despite the adverse economic conditions globally amid the ongoing pandemic," said Aditi Nayyar, chief economist at ratings firm Icra. </p>.<p>With the domestic and global lockdowns to fight Covid-19 exuding a differentiated impact on exports and imports, the merchandise trade deficit shrunk to just $10.0 billion in Q1 FY2021, most of which was accounted for by the net oil balance</p>
