Saturday 24 August 2013

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These payments were “invisibles” in RBI books. Indians spent 70% more in 2004-05 on travel abroad and on sourcing foreign transport, engineering, constancy and distribution services to cope with growingbusiness needs. business consulting firms Also, India’s external sector current account slipped into a deficit of $6.4 billion in 2004-05 after a three-year span of continuous surpluses, preliminary RBI data showed. Non-capital receipts from abroad exceeded payments made overseas by $10.5 billion in the current account in 2003-04. Significantly, as more and more Indians travel abroad and Indian businesses avail of foreign services, payments on these counts are increasing sharply. These payments, categorised as “invisibles”, rose sharply last fiscal to touch $45.8 billion. India’s strength in its external sector in recent years has been “invisibles.” Invisible receipts due to foreign tourists coming to India, Indian workers sending in remittances and exports of services, especially computer software, have been robust and have provided a surplus over invisible payments. In 2004-05 too, invisible receipts were in surplus by about $31.6 billion. business services directory But the growth in invisible payments at 70% in 2004-05 was much stronger than the 48% growth in invisible receipts, thereby opening up the possibility of the invisible account getting into the red in coming years. As such the trade account, representing merchandise exports and imports, went deep into the red in 2004-05, showing the deficit at a historic high of $38.1 billion. But for the surplus in the invisibles, India’s current account gap would have been much larger than a modest $6.4 billion. But if invisible payments continue to grow faster that invisible receipts, the possibility of a deficit in the coming years cannot be ruled out. service providers from India Huge net capital inflows in 2004-05 amounting to $32.5 billion meant that India could easily negotiate the modest current account deficit of $6.4 billion and yet add over $26.1 billion to its forex kitty. The viability of India’s external balance of payments would, therefore, depend on invisible surpluses and net capital inflows. The good news is that in 2004-05, receipts grew by 25% from international tourist traffic to India. Private transfers, comprising primarily remittances from Indians working abroad, remained sizeable at $20.9 billion. IT services exports too were buoyant, touching $17.3 billion.

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