Oil shock hits BoP in Q1

By Our Special Correspondent

CHENNAI, OCT. 4. The external sector has come in for a sudden shock after a somewhat comfortable position at the end of last year. A sharp rise in the oil import bill on account of the shooting up of international crude oil prices pushed up imports in the first quarter this year. The adverse trade balance thus ballooned to $4743 million in April-June against $4157 million in the same period last year. The buoyancy in private transfers and software exports could not help matters and the current account deficit rose to $2454 million in Q1 this year from $1755 million in the same period last year. With a reduction in capital flows led by portfolio inflows, the overall balance of payments (BOP) was a negative at $1021 million in the first quarter a surplus of $1490 million in the same period last year.

Invisibles in the current account rose at a lower pace at $2289 million against a rise of $2402 million. Services could bring in only $28 million (net) more against a handsome realisation of $3408 million in the first quarter of 1999. But private transfer were higher at $3360 million against $2801 million in Q1 of last year.

On the capital account side, the surplus halved to $1393 in q1 this year against $2779 million in the same period last year. Fresh foreign investments (net) dipped to $1197 million this year from $1340 million. While direct investments moved up, portfolio investment declined. Banking capital was little changed at $1250 million. But NRI deposits improved by $752 million against an increase of $611 million.

In the last quarter of 2000 ( Jan- Mar) the current account deficit was $1069 million and the surplus on capital account $4044 million resulting in a positive balance of $3323million including errors and omissions.

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