News: Indian travel buck gives visible lift to invisibles
(DNA 18/04/2006) New Delhi - In a clear sign that more people are travelling to India for business and pleasure, receipts from travel brought in $5.3 billion in April-December 2005. That’s a rise of 19% over the same period of 2004, data from the Reserve Bank of India shows.
Outbound travel is also increasing, though not at the same pace. Payments under the travel head rose only 8% during the same period. And the net of receipts over payments rose an awesome 129% (see table).
“This shows that India is a favoured destination. A little improvement in our infrastructure will go a long way,” says Jibon Mukhopadhyay of the S P Jain Institute of Management and former economic advisor, Tata Services.
Tourism is clearly the new star driving growth in India’s invisibles earnings (earnings from abroad from transactions involving services). The invisibles account has been bailing out India on the external sector.
Net invisibles (receipts over payments) rose 36% in April-December 2005 over the same period in 2004. The $28 billion surplus on the invisibles account helped contain the current account deficit at $13.4 billion in the first nine months of 2005-06.
This figure would otherwise have been higher thanks to the huge trade deficit (the gap between merchandise exports and imports) of $41.5 billion.
“If the invisibles account is an index of globalisation,” says Mukhopadhyay, “then India is clearly doing well.” The break up of the invisibles account proves that.
Take the case of transportation, where the net has actually seen a 200% decline because of a $1.5 billion rise in payments. That, the RBI itself explains, is not only due to the increase in international shipping freight rates because of rising oil prices but also indicates the surge in India’s volume of foreign trade.
Services continued to be the mainstay of the invisibles account, with a 65% share. Within that, software held on to its predominant position, logging a 28% rise in net receipts.
Software imports seemed to have grown higher than exports in April-December 2005, but Mukhopadhyay doesn’t feel this is a cause for concern. In a particular phase, imports may be more but they may be inputs which will help in improving the receipts position in later years, he explains.
Private transfers are the next biggest chunk of the invisibles account. Indeed, though the redemption of the India Millenium Deposit bonds led to a huge outflow of investment income, a bulk of this was ploughed back in the form of private transfers, which accounts for 97% of all transfers.
With no significant narrowing of the trade deficit expected in 2006-07, hopes will be pinned on higher invisibles receipts to contain the current account deficit.
Outbound travel is also increasing, though not at the same pace. Payments under the travel head rose only 8% during the same period. And the net of receipts over payments rose an awesome 129% (see table).
“This shows that India is a favoured destination. A little improvement in our infrastructure will go a long way,” says Jibon Mukhopadhyay of the S P Jain Institute of Management and former economic advisor, Tata Services.
Tourism is clearly the new star driving growth in India’s invisibles earnings (earnings from abroad from transactions involving services). The invisibles account has been bailing out India on the external sector.
Net invisibles (receipts over payments) rose 36% in April-December 2005 over the same period in 2004. The $28 billion surplus on the invisibles account helped contain the current account deficit at $13.4 billion in the first nine months of 2005-06.
This figure would otherwise have been higher thanks to the huge trade deficit (the gap between merchandise exports and imports) of $41.5 billion.
“If the invisibles account is an index of globalisation,” says Mukhopadhyay, “then India is clearly doing well.” The break up of the invisibles account proves that.
Take the case of transportation, where the net has actually seen a 200% decline because of a $1.5 billion rise in payments. That, the RBI itself explains, is not only due to the increase in international shipping freight rates because of rising oil prices but also indicates the surge in India’s volume of foreign trade.
Services continued to be the mainstay of the invisibles account, with a 65% share. Within that, software held on to its predominant position, logging a 28% rise in net receipts.
Software imports seemed to have grown higher than exports in April-December 2005, but Mukhopadhyay doesn’t feel this is a cause for concern. In a particular phase, imports may be more but they may be inputs which will help in improving the receipts position in later years, he explains.
Private transfers are the next biggest chunk of the invisibles account. Indeed, though the redemption of the India Millenium Deposit bonds led to a huge outflow of investment income, a bulk of this was ploughed back in the form of private transfers, which accounts for 97% of all transfers.
With no significant narrowing of the trade deficit expected in 2006-07, hopes will be pinned on higher invisibles receipts to contain the current account deficit.
posted by InCar Group Press Room at 12:51
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