India's Balance Of Payments Surplus Soars To $18.6 Billion In Q2 FY25, Powered Record NRI Deposits And FPI Inflows: Bank Of Baroda

India's Balance of Payments (BoP) witnessed a remarkable improvement in the second quarter of FY25, driven by robust inflows from Foreign Portfolio Investments (FPIs), External Commercial Borrowings (ECBs), and Non-Resident Indian (NRI) deposits, according to a recent report by Bank of Baroda.

Capital Account Surplus: A Key Driver

The report highlighted a substantial increase in the capital account surplus, which rose to $11.9 billion in the second Quarter (Q2) Financial Year (FY)25, compared to $10.3 billion in the same period last year reflecting India's ability to attract capital amidst global financial uncertainties.

BoP Accretion: A Nine-Fold Surge

The BoP recorded an accretion of $18.6 billion in the Q2 FY25, a sharp rise from $2.5 billion in Q2 FY24, underpinned by strong inflows across multiple channels.

“India's balance of payments recorded an accretion of $18.6 bn in Q2 FY25, compared with $2.5bn in Q2 FY24. This was supported by robust inflows from FPIs, ECBs, and NRI deposits,” the report stated.

FPI Inflows

FPI inflows saw an impressive surge, reaching $19.9 billion in Q2 FY25, up from $4.9 billion in Q2 FY24. This reflects growing investor confidence in India's markets, bolstered by improved macroeconomic stability and favorable global conditions.

NRI Deposits and ECBs

NRI Deposits: Inflows more than doubled to $6.2 billion in Q2 FY25, compared to $3.2 billion in the same quarter last year.

ECBs: Net inflows rebounded significantly, recording $5 billion in Q2 FY25, a stark turnaround from the $1.9 billion net outflows seen in Q2 FY24.

FDI Outflows

Foreign Direct Investment (FDI) outflows increased to $2.2 billion in Q2 FY25, up from $0.8 billion in Q2 FY24. However, the strong performance of other capital account components more than compensated for this rise.

While India continues to face challenges in areas like the current account deficit and trade imbalances, the strong capital inflows have provided much-needed support to its external finances. 

The robust contributions from FPIs, ECBs, and NRI deposits have solidified India's external financial position, with the BoP recording a substantial surplus in Q2 FY25.

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