The Economic Survey 2020-21 on Friday projected India’s current account to register a surplus of 2 percent of the Gross Domestic Product (GDP) in FY21 after a gap of 17 years.

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India’s current account deficit averaged 2.2 percent of GDP in the last 10 years.

However, reversing this trend, current account balance turned into surplus (0.1 percent of GDP) in fourth-quarter 2019-20 on the back of, among others, a lower trade deficit and a sharp rise in net invisible receipts.

This quarterly surplus was registered after a gap of 13 years after the fourth quarter of fiscal 2006-07. This has been followed by successive current account surpluses in the first and second quarters of the current fiscal.

In the first half of 2020-21, steep contraction in merchandise imports and lower outgo for travel services led to a sharper fall in current payments (by 30.8 per cent) than current receipts (15.1 percent) – leading to a current account surplus of $34.7 billion (3.1 percent of GDP)

"Given the trend in imports of both goods and services, it is expected that India will end with an annual current account surplus of at least 2 percent of GDP – after a period of 17 years," said the survey for 2020-21.

India, being a developing and emerging market economy, typically runs a deficit on the current account to supplement domestic savings with foreign savings to fund higher investment, it said.

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The current account balance is the difference between exports and imports of goods and services.

The survey was tabled in Parliament by Finance Minister Nirmala Sitharaman ahead of the government's Budget for the fiscal year beginning April 1, 2021.

The Economic Survey, authored by a team led by Chief Economic Adviser Krishnamurthy Venkata Subramanian, details the state of different sectors of the economy as well as reforms that should be undertaken to accelerate growth.

(With inputs from PTI)

(Edited by : Aditi Gautam)

First Published:Jan 29, 2021 1:44 PM IST