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India may end FY02 with current account surplus, says RBI

The Reserve Bank of India Governor Bimal Jalan said on Tuesday the country may have posted a current account surplus in the financial year ended March, reversing the trend of deficits for nearly two-and-a-half decades.

"The current account could see a small surplus at the end of the year...I see no problems on the balance of payments front," Jalan told reporters on the sidelines of a banking seminar.

India last posted a current account surplus in the year to March 1978.

Data from the central bank released on the weekend showed India's current account surplus for the October-December quarter was $785 million, compared with a deficit of $171 million in the same period the previous year.

Third-quarter balance of payments stood at a surplus of $3.624 billion.

The healthy external position was primarily because of higher foreign investments, both portfolio as well as direct flows, the central bank said.

These inflows have also boosted India's foreign exchange reserves, which stood at $53.317 billion in the week ended March 22, with $5 billion coming in the first three months of the calendar year.

Prepay debt

Jalan said the high foreign exchange reserves would allow the government to prepay a part of its foreign debt.

India's external debt totalled $100.4 billion at the end of March 2001, up from $98.3 billion the previous year, making it the world's tenth-largest debtor. Of this short-term debt totalled $3.47 billion.

"Wherever the government will gain from prepayment they will do that. We are also advising them to do so," Jalan said, but declined to say how much the government would prepay.

External debt increased in the year to March 2001 due to the mobilisation of $5.5 billion from expatriate Indians in October-November 2000 through the state-run State Bank of India's India Millennium Deposit Scheme.

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