Indian diaspora deposits boost capital account to $33.5 billion surplus in July, RBI data shows

In July, the net deposits of the Indian diaspora in India contributed a staggering $33.5 billion to the country's capital account, resulting in a significant surplus. This boost led to a positive balance of payments, effectively offsetting the current account deficit for the month, according to data released by the Reserve Bank of India (RBI).

The capital account surplus in July reached $27.7 billion, marking a reversal of the first quarter deficit. For the first four months of the fiscal year, the capital account surplus stood at $23.9 billion, up from $11.4 billion in the same period last year. The balance of payments for the fourth month of the fiscal year stood at $20.8 billion, compared to a deficit of $8.1 billion for the April-June period.

India's capital account surplus for July was further bolstered by a net $7.3 billion in foreign direct investment inflows into the country's capital market, with portfolio investment flows turning positive at $4.1 billion. However, there was a net outflow of $2.3 billion in external commercial borrowings during the month. The country's current account, which tracks net international trade and financial transfers, remained in deficit at $7 billion in July, bringing the total deficit for the fiscal year to $11.2 billion.

This deficit was mainly driven by a merchandise trade deficit of $31.7 billion in July, while positive flows from services and net transfers helped balance the books. The merchandise trade deficit expanded to $117.8 billion for the first four months of the fiscal year, up from $97.1 billion a year ago.