With the revival in capital inflows to India, particularly foreign investments, the capital account showed a turnaround from a negative balance in last two quarters of 2008-09 to a positive balance of US $ 6.7 billion during Q1 of 2009-10. It was $ 11.1 billion in Q1 of 2008-09. According to the Reserve Bank of India, despite net invisibles surplus, the large trade deficit mainly on account of sharp decline in exports led to a current account deficit of $ 5.8 billion in Q1 of 2009-10. However, this was lower than $ 9.0 billion during Q1 of 2008-09.

The gross capital inflows to India revived during Q1 of 2009-10 as compared with the last two quarters of 2008-09 manifesting confidence in India’s long-term growth prospects. The gross inflows were, however, at $ 78.5 billion as compared to $ 90.9 billion in Q1 of 2008-09 mainly led by inflows under FIIs, FDI and NRI deposits. Gross capital outflows during Q1 of 2009-10 stood lower at $ 71.8 billion as against $ 79.7 billion in Q1 of 2008-09, the RBI said. Net FDI inflows (net inward FDI minus net outward FDI) amounted to $ 6.8 billion in Q1 of 2009-10 ($ 9.0 billion in Q1 of 2008-09). Net inward FDI stood at $ 9.5 billion during Q1 of 2009-10 ($ 11.9 billion in Q1 of 2008-09). Net outward FDI stood at $ 2.6 billion in Q1 of 2009-10 as compared with US$ 2.9 billion in Q1 of 2008-09.

During Q1 of 2009-10, FDI to India was channeled mainly into manufacturing sector (19.2 per cent), real estate activities (15.6 per cent), financial services (15.4 per cent), construction (12.2 per cent) and business services (11.7 per cent). Mauritius continued to be the major source of FDI during Q1 of 2009-10 with a share of 48.9 per cent followed by the USA at 12.8 per cent, the RBI said.

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