Indian Balance of Payments and Offshore Services

The RBI is concerned about India’s Balance of Payments. One of the reasons ascribed to the growing problem is the slow down in the Indian Offshore Services industry. From today’s FT

One reason, the central bank said, for the deterioration in the balance of payments was a decline in an “invisibles surplus”, caused in part by falling revenues to India’s prized outsourcing sector.

For my book I crunched some data from the RBI website. As you can see, on the Current Account, India depends a whole lot on the Offshore industry.

Without the Offshore industry being where it is today, the import regime could not have been as easy as it is today.

But I am a little confused on the timing of this. Given that last quarter was very good for most of the top companies, isn’t this now no longer a concern? Or is it that RBI data gathering and analysis lags public companies announcing their results by a quarter?

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3 Responses to Indian Balance of Payments and Offshore Services

  1. Vishwa Vedula says:

    Policy decision based on Govt data be it in India or even in developed world for sure is not a great idea.

    Quarterly GDP in US gets revised significantly in a matter of months every quarter (as they cut around 1% today)

    Go Figure the accuracy and and analysis based on that.

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  2. Krishna says:

    BoP is not as much a concern for the Indian economy as is inflation… Increase in money supply (courtesy FII / FDI investments, Remittances from abroad) from the developed world because of the fragile economic conditions in those nations and their near zero interest rates translate into a financial deluge into India… Earlier the worry was about the consequences of this capital taking its flight back…Now even that is fading since the signals from overseas economies has been that they are hardly on their path to recovery and are still clueless about how deep a mire they've gotten into…and then political squabbles over there take care of the rest to make sure that another five to six years India just need to viral the illusions of grandeur, demographic dividend and such buzz words so that the smart ones can take advantage of the market momentum and wind up safe and secure in some corner for the rest of their lives…

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    • Basab Pradhan says:

      BoP may not be a concern at this time, but the Current Account deficit should be. FII inflows are fickle and dry up, or become outflows in response to stimuli that could be entirely outside the control of India.

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