Trade surplus

Balance of Payments (BoP) statistics systematically summaries the economic transactions of an economy with the rest of the World for a specific period.
BoP broadly comprises current account, capital account and changes in foreign exchange reserves.

Current account of the BoP includes merchandise (exports and imports) and invisibles.
Invisible transactions are further classified into three categories, namely
- Services-travel, transportation, insurance, Government not included elsewhere (GNIE) and miscellaneous (such as, communication, construction, financial, software, news agency, royalties, management and business services);
- Income; and
- Transfers (grants, gifts, remittances, etc.) which do not have any quid pro quo.

The main components of the capital account include foreign investment, loans and banking capital.
Foreign investment, comprising Foreign Direct Investment (FDI) and Portfolio Investment consisting of Foreign Institutional Investors (FIIs) investment, American Depository Receipts/Global Depository Receipts (ADRs/GDRs) represents non-debt liabilities, while loans (external assistance, external commercial borrowings and trade credit) and banking capital, including non-resident Indian (NRI) deposits are debt liabilities.

According to the latest RBI data, India recorded a surplus of $19.8 billion (3.9% of GDP) in its current account balance in the first quarter of FY21.
India registered a surplus of $0.6 billion (0.1% of GDP) in the preceding quarter. A deficit of $15 billion (2.1% of GDP) was recorded a year earlier.
The surplus in the current account in the first quarter of 2020-21 was on account of a sharp contraction in trade deficit to $10 billion due to a steeper decline in merchandise imports relative to exports on a year-on-year basis.

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