India records $18.6 billion BoP accretion in Q2 FY25, driven by FPIs, ECBs, and NRI deposits
India’s Balance of Payments (BoP) experienced a significant boost in the second quarter of FY25, with inflows from Foreign Portfolio Investments (FPIs), External Commercial Borrowings (ECBs), and Non-Resident Indian (NRI) deposits contributing to a substantial surplus. The latest report from the Bank of Baroda underscores this robust growth, reported thehindubusinessline.com
India’s Balance of Payments Sees Major Growth
The BoP recorded an accretion of $18.6 billion in Q2 FY25, a sharp increase from $2.5 billion in the same quarter of the previous fiscal year. This surge was attributed to a strong performance in capital account inflows. The capital account surplus rose to $11.9 billion in Q2 FY25 compared to $10.3 billion in Q2 FY24.
The report highlighted that FPIs were a key driver, with inflows surging to $19.9 billion in Q2 FY25 from $4.9 billion a year earlier. NRI deposits also saw remarkable growth, more than doubling to $6.2 billion from $3.2 billion in Q2 FY24. Additionally, net inflows from ECBs rebounded strongly, recording $5 billion, a notable turnaround from the net outflows of $1.9 billion in the corresponding period last year.
Investor Confidence Bolsters India’s BoP
Despite an increase in Foreign Direct Investment (FDI) outflows, which rose to $2.2 billion from $0.8 billion year-on-year, the strong performance in other components of the capital account provided a cushion. Improved investor confidence and favorable global financial conditions played a pivotal role in bolstering India’s external position.
While challenges like the current account deficit and trade balance pressures remain, the inflows from FPIs, ECBs, and NRI deposits have significantly strengthened India’s external finances. These developments underscore the resilience of India’s external sector in navigating global economic uncertainties.
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