India reported a current account surplus for a second straight quarter, the Reserve Bank of India (RBI) said on Wednesday. The current account balance, which represents the country’s net export and imports and also payments made to foreign investors or inflows from them, reached $19.8 billion, i.e. 3.9% of GDP in the April-June quarter, PTI reported.

This happened as merchandise imports declined amid the COVID-19 pandemic.

India’s current account surplus was $0.6 billion or 0.1% of GDP in the January-March quarter, while it had reported a current account deficit of USD 15 billion or 2.1% of GDP in the year-ago period.

The current account is an important indicator of a country’s external sector.

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In a recent report, domestic ratings agency Icra had said that India’s current account will swing to a surplus of  $30 billion in FY21 or 1.2% of GDP on a slowdown in imports during the pandemic, but added that it will be a “temporary” phenomenon.

The RBI on Wednesday said net services receipts remained stable at $20.5 billion, as against $20.1 billion in the year-ago period, primarily on the back of net earnings from computer services.

Private transfer receipts, mainly representing remittances by Indians employed overseas, amounted to $18.2 billion which is a decline of 8.7% from their level a year ago, the RBI said.

Net outgo from the primary income account, primarily reflecting net overseas investment income payments, increased to $7.7 billion from $6.3 billion a year ago, it said.

In the financial account, net foreign direct investment recorded outflow of $0.4 billion as against inflows of $14.0 billion in the first quarter of 2019-20.

Net foreign portfolio investment was $0.6 billion as compared to $4.8 billion in the first quarter of 2019-20 as net purchases in the equity market were offset by net sales in the debt segment, it said.

With repayments exceeding fresh disbursals, external commercial borrowings to India recorded a net outflow of $1.1 billion in the first quarter of 2020-21, as against an inflow of $6.0 billion a year ago, the RBI said.

Net inflow on account of non-resident deposits increased to $3 billion in the June quarter, as against $2.8 billion in the first of 2019-20, it said.

There was an accretion of $19.8 billion to the foreign exchange reserves (on a balance of payments basis) as compared to that of $14.0 billion in the first quarter of 2019-20, the central bank said.