EXIM Bank

EXIM BANK

INTRODUCTION
THE INSTITUTION

Export-Import Bank of India is the premier export finance institution of the country, set up in 1982 under the Export-Import Bank of India Act 1981. Government of India launched the institution with a mandate, not just to enhance exports from India, but to integrate the country’s foreign trade and investment with the overall economic growth. Since its inception, Exim Bank of India has been both a catalyst and a key player in the promotion of cross border trade and investment. Commencing operations as a purveyor of export credit, like other Export Credit Agencies in the world, Exim Bank of India has, over the period, evolved into an institution that plays a major role in partnering Indian industries, particularly the Small and Medium Enterprises, in their globalisation efforts, through a wide range of products and services offered at all stages of the business cycle, starting from import of technology and export product development to export production, export marketing, pre-shipment and post-shipment and overseas investment.



THE INITIATIVES

• Exim Bank of India has been the prime mover in encouraging project exports from India. The Bank provides Indian project exporters with a comprehensive range of services to enhance the prospect of their securing export contracts, particularly those funded by Multilateral Funding Agencies like the World Bank, Asian Development Bank, African Development Bank and European Bank for Reconstruction and Development.

• The Bank extends lines of credit to overseas financial institutions, foreign governments and their agencies, enabling them to finance imports of goods and services from India on deferred credit terms. Exim Bank’s lines of Credit obviate credit risks for Indian exporters and are of particular relevance to SME exporters.

• The Bank’s Overseas Investment Finance programme offers a variety of facilities for Indian investments and acquisitions overseas. The facilities include loan to Indian companies for equity participation in overseas ventures, direct equity participation by Exim Bank in the overseas venture and non-funded facilities such as letters of credit and guarantees to facilitate local borrowings by the overseas venture.

• The Bank provides financial assistance by way of term loans in Indian rupees/foreign currencies for setting up new production facility, expansion/modernization/upgradation of existing facilities and for acquisition of production equipment/technology. Such facilities particularly help export oriented Small and Medium Enterprises for creation of export capabilities and enhancement of international competitiveness.

• Under its Export Marketing Finance programme, Exim Bank supports Small and Medium Enterprises in their export marketing efforts including financing the soft expenditure relating to implementation of strategic and systematic export market development plans.

• The Bank has launched the Rural Initiatives Programme with the objective of linking Indian rural industry to the global market. The programme is intended to benefit rural poor through creation of export capability in rural enterprises.

• In order to assist the Small and Medium Enterprises, the Bank has put in place the Export Marketing Services (EMS) Programme. Through EMS, the Bank seeks to establish, on best efforts basis, SME sector products in overseas markets, starting from identification of prospective business partners to facilitating placement of final orders. The service is provided on success fee basis.

• Exim Bank supplements its financing programmes with a wide range of value-added information, advisory and support services, which enable exporters to evaluate international risks, exploit export opportunities and improve competitiveness, thereby helping them in their globalisation efforts.



THE LEADERSHIP



Since inception, Exim Bank has had, at the helm of its affairs, leading banking professionals as Chief Executive Officers. Shri R.C. Shah, a seasoned banker, with vast commercial and international banking experience, was the first Chairman and Managing Director of Exim Bank during January 1982-January 1985. His vision helped the setting up of the institution as a unique organizational model, with a flat, non-hierarchical culture, multi-disciplinary approach to problem solving, access to the latest technology and a climate for innovation. He was succeeded by Shri Kalyan Banerji, who was the Chairman and Managing Director during February 1985-April 1993. Shri Banerji had long years of commercial banking experience, with exposure to international banking. Ms. Tarjani Vakil took over as the Chairperson and Managing Director of the Bank in August 1993 and guided the institution in its endeavours for export capability creation, till October 1996. Ms. Vakil had long years of development banking experience and was associated with Exim Bank since its inception. She was succeeded by Shri Y.B. Desai, who was the Managing Director of the Bank during August 1997-April 2001. Shri Desai had vast commercial banking experience and joined Exim Bank in the initial years of the institution. Shri T.C. Venkat Subramanian took over as Chairman and Managing Director of Exim Bank from May 1, 2001. Shri Subramanian has both commercial banking and development banking experience and has been associated with Exim Bank since its inception. Under the stewardship of Shri Subramanian, Exim Bank has crossed significant milestones in business promotion as well as other initiatives as the premier export finance institution of the country.



THE BOARD



In its endeavours, Exim Bank of India has, all along, been guided, at the Board level, by senior policy makers, expert bankers, leading players in industry and international trade as well as professionals in exports or imports or financing thereof. The Board currently includes top level functionaries from the Ministries of Finance, Commerce, External Affairs and Industry, Government of India, a Deputy Governor from the Reserve Bank of India, Chairmen of Industrial Development Bank of India, Export Credit Guarantee Corporation of India, State Bank of India, Punjab National Bank and Bank of Baroda and the Director General of Research and Information System for Developing Countries. Some of the illustrious Board Members in the past, include Dr. Montek Singh Ahluwalia (former Secretary, Ministry of Finance, Government of India and currently Deputy Chairman, Planning Commission of India), Shri Kamlesh Sharma (former Indian High Commissioner in the UK and currently the Commonwealth Secretary General), Dr. Abid Hussain (former Commerce Secretary, Government of India and Indian Ambassador to USA), Dr. Bimal Jalan (former Secretary, Ministry of Finance, Government of India and Governor, RBI and currently a Member of Parliament in the Rajya Sabha), Shri S. Venkitaramanan (former Secretary, Ministry of Finance, Government of India and Governor, RBI), Dr. Deepak Nayyar (former Chief Economic Advisor, Ministry of Finance, Government of India and currently Professor of Economics, Jawaharlal Nehru University, New Delhi), Shri Tejendra Khanna (former Commerce Secretary, Government of India and currently Lt. Governor of Delhi), Dr. S.S.Sidhu (former Industry Secretary, Government of India and currently Governor of Goa ), Shri. T.R. Prasad (former Industry Secretary and Cabinet Secretary, Government of India ) and Shri S.S. Tarapore (former Deputy Governor, RBI, who led the Tarapore Committee on Capital Account Convertibility).





OBJCTIVES



“… for providing financial assistance to exporters and importers, and for functioning as the principal financial institution for coordinating the working of institutions engaged in financing export and import of goods and services with a view to promoting the country’s international trade…”



“… shall act on business principles with due regard to public interest”

: The Export-Import Bank of India Act, 1981

Evolving Vision  See Above Figure....


Genesis

• SET UP BY AN ACT OF PARLIAMENT IN SEPTEMBER 1981

• WHOLLY OWNED BY GOVERNMENT OF INDIA

• COMMENCED OPERATIONS IN MARCH 1982

• APEX FINANCIAL INSTITUTION

Balance of payments structure..

BALANCE OF PAYMENTS

Balance of Payment (BOP) of a country is a systematic record of all economic transactions, between the residents of the country and the rest of the world in a given period of time, generally one year. 

Residents: Persons are residents of a country in which they normally reside.

Economic Transactions: It is an exchange or transfer of value. This transfer/exchange can take the form of goods or services, or it can take form of the donations, gifts or reparations, which are called unilateral transfers.

Systematic record: Records prepared by classifying all items as per their nature, are systematic records.

Balance of Payments in Account Form

Balance of Payment Account
RECEIPTS		PAYMENTS
Current Account		Current Account
1	Visible Trade: Export of Goods & Merchandise	1	Visible Trade: Import of Goods & Merchandise
2	Invisible Trade: Export of Services	2	Invisible Trade: Import of Services
3	Unilateral Transfers	3	Unilateral Transfers
Capital Account		Capital Account
4	Medium/Long Term Capital Receipts	4	Medium/Long Term Capital Payments
5	Movement in Reserves	5	Movement in Reserves
Total		Total

Transactions inside the balance of payments can be classified in two broad categories: transactions on the capital account, and those on the current account.

The current account: The current account is a record of all transactions relating to trade in goods and services, net interest and dividend payments and any transfers in the form of foreign aid. Therefore, the three component of the current account are:

1.     The trade balance: This is the difference between the exports and imports of goods and services. The excess of exports over imports is called the trade surplus, and likewise if the imports exceed exports, there is a trade deficit. Often, a distinction is made between goods and services by calling them visible and invisible trade. The trade balance is the most significant element of the current account. Often, a ‘worsening balance of payments’ refers to an increase in the trade deficit.

2. Net foreign income: Income is earned by residents on assets held abroad and likewise foreigners earn income on the domestic assets. Net foreign income is the difference of the two.

3.  Unilateral transfers include transfers such as foreign aid that are made without consideration.

The capital account
The capital account is a record of all transactions that represent flow of money for investment and international loans. It is different from the current account in that it does not include settlements for current transactions. To illustrate with an example, while the purchase of a machinery would feature in the current account, its financing with an international loan would be an entry in the capital account. Investments by foreigners in our stock markets, raising of capital by Indian companies in markets abroad, foreign direct investments in Indian industry are all inflows on the capital account. Similarly, extinguishments of debt by settlement represents an outflow on the capital account.

Long and short-term capital flows

A very important characteristic of the capital account is the nature of the capital flow, i.e. whether it is short term or long term in nature. When a punter puts money in India’s stock markets hoping to make a quick gain, it will be regarded as a short-term capital flow. Similarly, when an investor eyeing high Indian interest rates deposits money with an Indian bank, it too is a short-term capital flow. On the other hand, when a large international financial investor lends long-term money to an Indian company so that it can buy plant and machinery, it is an example of long term, also called ‘stable’ capital flows. The difference is crucial because only long term capital flows can make any significant impact on the economy. Short term capital flows can be quite destabilising, for instance as they were in the recent South Asian crisis when all the ‘hot’ money was pulled out at the first signals of trouble and eventually led to the melt down.

The current account and the capital account are complementary to each other. The net total of the two decides the net increase or decrease in the country’s forex reserves. For the past many years, the Indian economy has witnessed a steady worsening of the current account deficit, but large capital inflows in the form of foreign direct investment and portfolio investment and taken together, the reserves have been building up. A deficit in the current account is not necessarily a negative indicator, so long as the deficit is used to augment productive capacity. This can take the form of investments in infrastructure that make economic expansion possible and increase the capacity of the country to export in the future. At the same time, a surplus in the current account does not necessarily imply prosperity, for instance Russia has a large current account surplus from its export of commodities and arms, which is offset by large-scale capital flight and therefore a deficit on the capital account.

Balance of Payments- Book Keeping
Balance of Payments is an application of Double entry book keeping i.e. debits and credits always balance and Balance of Payment is always in balance (equilibrium). Left side of Balance of Payment A/c shows all the ways in which the country can acquire foreign currency. Right side shows how foreign currency is spent. 

Balance of Payments -Disequilibrium
A Balance of Payment Account comprises of Autonomous and Induced transactions Autonomous transactions are real trade transactions, pertaining to exports and imports of goods and services, that are undertaken for their own sake, under profit or utility motive.

Any imbalance (debit or credit) in the value of autonomous transactions has to be counter balanced by a corresponding change (increase/decrease) in foreign exchange reserves or short term capital movement which is referred to as induced or accommodating transaction (which is not undertaken for its own sake, but which emerges on account of imbalance in the current account). Thus in the process of equalizing the Balance of Payment Account, induced or accommodating transactions take place in the capital account. Such induced transactions often involve short-term capital movement in the form of lending or borrowing, addition or subtraction in foreign exchange reserves of the country etc.

Causes of Disequilibrium in BoP
Since the balance of payments deficit refers to the excess of autonomous payments over the autonomous receipts, the causes of the deficit in the balance of payments are essentially those which cause the payments to rise faster than the receipts, Among these many causes, the major one is the deficit in the balance of trade i.e. excess of imports over exports of goods. This may, in turn be caused by mounting domestic requirements of imported goods (such as machinery and equipment for development), slow growth in exports, high inflation in the home economy.

India’s Balance of Payments
Strong capital flows led by a renewal in portfolio inflows resulted in an overall balance of payments (BoP) surplus for the fourth successive year. This enabled an increase in foreign exchange reserves by US $ 5,546 million during the year to US$38,036 million by end-March 2000.

India's Balance of Payments

BoP Projection for fiscal 2000-01

CATEGORY	1999-2000	2000-2001
Merchandise Trade	-17	-22
Invisibles	12.9	15.50
Current Account Balance	-4.1	-6.5
Foreign Investment	5.1	2
External Assistance	0.9	1
Commercial Borrowing	0.7	-1
Bank Capital	2.7	3
Rupee Debt Service and Others	0.8	1
Total Capital Account	10.2	6
Overall balance of payments	6.1	-0.5

Source: RBI data, CFO India estimates

Wise management of the country’s external sector is vital to well being of the people of India. Faced with a very small domestic market with limited purchasing power, exports alone can provide the engine of growth that can pull large masses of the population out of poverty. While liberalization and freedom from exchange control are laudable objectives, these cannot be achieved unless other liberalization measures sustainably improve the productivity of Indian industry to global standards. Premature liberalization of the forex markets may lead to huge capital flights accompanied by loss of domestic and international confidence in the economy and ultimate pauperisation of an already impoverished populace. Since excessive control and government intervention can also have equally disastrous consequences, our regulatory authorities will need to tread a very fine line between control and the need to globalise. A constantly shifting balance will need to be struck between the interest of the nation, the needs of the economy, and international pressures such as that from the WTO.

Balance of payments

BALANCE OF PAYMENT
India's foreign exchange reserves stand at  $267.71 billion as on July 24, 2009
Shrinking foreign trade

INDIA’s trade deficit during the first three months of current fiscal year (2009-10) on a balance of payments (BoP) basis was large due to the steeper decline in the pace of exports than that of imports The trade deficit on a BoP basis in Q1 (US$ 26.0 billion) was, however, less than that in Q1 of 2008-09 (US$ 31.4 billion). This is revealed in e report of the country’s central banking authority Reserve Bank of India (RBI) on India's Balance of Payments Developments during the first quarter (April-June) of 2009-10.

The key features of India’s BoP that emerged in Q1 of fiscal 2009-10 were:(i) The decline in exports which started since October 2008 continued during the first quarter of 2009-10. Import payments, on a BoP basis, also continued its declining trend mainly due to lower oil import bill; (ii) Private transfer receipts remained buoyant and increased by 9.4 per cent to US$ 13.3 billion during Q1 of 2009-10. Exports of software services, however, declined during Q1 of 2009-10; (iii) Despite net invisibles surplus at US$ 20.2 billion, the large trade deficit (US$ 26.0 billion) mainly on account of sharp decline in exports led to a current account deficit of US$ 5.8 billion in Q1 of 2009-10 (US$ 9.0 billion during Q1 of 2008-09); (iv) With the revival in capital inflows to India, particularly foreign investments, the capital account showed a turnaround from a negative balance in last two quarters of 2008-09 to a positive balance of US$ 6.7 billion during Q1 of 2009-10; (v) Portfolio investment witnessed a sharp turnaround from net outflows of US$ 2.7 billion in Q4 of 2008-09 to net inflows of US$ 8.3 billion during Q1 of 2009-10; (vi) NRI deposits also witnessed higher inflows reflecting the positive impact of the revisions in the ceiling interest rate on NRI deposits; (vii) There was a marginal increase in reserves on BoP basis (i.e., excluding valuation) during Q1 of 2009-10. However, the foreign exchange reserves including valuation increased by US$ 13.2 billion during Q1 of 2009-10 implying that the increase in reserves during this period was mainly due to valuation gains as the US dollar has depreciated against major currencies.

  

Major Items of India's Balance of Payments (US$ million)
	(2007-08) (PR)	(2008-09) (P)	April-June (2008-09) (PR)	April-June (2009-10) (P)
Exports	166163	175184	49120	38789
Imports	257789	294587	80545	64775
Trade Balance	-91626	-119403	-31425	-25986
Invisibles, net	74592	89587	22406	20179
Current Account Balance	-17034	-29817	-9019	-5808
Capital Account*	109198	9737	11254	5923
Change in Reserves# (+ indicates increase;- indicates decrease)	-92164	20080	-2235	-115
Including errors & omissions; # On BoP basis excluding valuation; P: Preliminary, PR: Partially revised. R: revised
SOURCE: Reserve Bank of India Report

Invisibles

(i) During Q1 of 2009-10, invisibles receipts declined marginally, while invisibles payments recorded a positive growth . In net terms, the invisibles balance at US$ 20.2 billion was lower than that in the corresponding period of the previous year (US$ 22.4 billion), though higher than that in Q4 of 2008-09 (US$ 19.3 billion).

Invisibles Receipts

(i) Invisibles receipts registered a marginal decline of 0.7 per cent in Q1 of 2009-10 (as against a higher growth of 30.3 per cent in Q1 of 2008-09) on account of a decline in almost all categories of services except insurance and financial services and a decline of 20.3 per cent in investment income receipts.

(ii) Exports of software services declined by 11.5 per cent during Q1 of 2009-10 as against an increase of 37.6 per cent in Q1 of 2008-09.  According to the NASSCOM, software services exports are projected to grow by 4 to 7 per cent to US$ 48 to 50 billion during the financial year 2009-10.

(iii) Travel receipts at US$ 2.3 billion during Q1 of 2009-10 declined by 8.7 per cent as against an increase of 19.9 per cent in Q1 of 2008-09 reflecting a slowdown in tourist arrivals in the country since November 2008. According to the data released by the Ministry of Tourism, foreign tourist arrivals declined by 1.8 per cent in Q1 of 2009-10.

Invisibles Payments

(i) Invisibles payments recorded a positive growth of 11.9 per cent in Q1 of 2009-10 (13.5 per cent in Q1 of 2008-09) mainly due to growth in payments under services and income account. In the services account, however, payments under travel, transportation, G.N.I.E. and software services recorded a negative growth in Q1 of 2009-10. 

(ii) Investment income payments (include mainly the interest payments on commercial borrowings, external assistance and non-resident deposits, and reinvested earnings of the foreign direct investment (FDI) enterprises operating in India) increased marginally to US$ 4.4 billion during Q1 of 2009-10 (US$ 4.1 billion in Q1 of 2008-09) mainly due to increased reinvested earnings of FDI companies in India (Table 8).

Invisibles Balance
(iii) A combined effect of decline in invisibles receipts and increase in invisibles payments led to marginally lower net invisibles (invisibles receipts minus invisibles payments) at US$ 20.2 billion  in Q1 of 2009-10 than that in the corresponding period of the previous year (US$ 22.4 billion) (Table 3). At this level, however, the invisibles surplus financed about 77.7 per cent of trade deficit during Q1 of 2009-10 (71.3 per cent during Q1 of 2008-09).

Current Account Deficit

i) Despite net invisibles surplus, the large trade deficit mainly on account of sharp decline in exports led to a current account deficit of US$ 5.8 billion in Q1 of 2009-10 (US$ 9.0 billion during Q1 of 2008-09).

Capital Account and Reserves

i) The gross capital inflows to India revived during Q1 of 2009-10 as compared to the last two quarters of 2008-09 manifesting confidence in India’s long-term growth prospects. The gross inflows were, however, at US$ 78.5 billion as compared to US$ 90.9 billion in Q1 of 2008-09 mainly led by inflows under FIIs, FDI and NRI deposits. Gross capital outflows during Q1 of 2009-10 stood lower at US$ 71.8 billion as against US$ 79.7 billion in Q1 of 2008-09.
(ii) With the revival in capital inflows to India, particularly foreign investments, the capital account showed a turnaround from a negative balance in last two quarters of 2008-09 to a positive balance of US$ 6.7 billion during Q1 of 2009-10 (US$ 11.1 billion in Q1 of 2008-09).
(iv) Net FDI inflows (net inward FDI minus net outward FDI) amounted to US$ 6.8 billion in Q1 of 2009-10 (US$ 9.0 billion in Q1 of 2008-09). Net inward FDI stood at US$ 9.5 billion during Q1 of 2009-10 (US$ 11.9 billion in Q1 of 2008-09). Net outward FDI stood at US$ 2.6 billion in Q1 of 2009-10 as compared with US$ 2.9 billion in Q1 of 2008-09.
(v) During Q1 of 2009-10, FDI to India was channeled mainly into manufacturing sector (19.2 per cent), real estate activities (15.6 per cent), financial services (15.4 per cent), construction (12.2 per cent) and business services (11.7 per cent). Mauritius continued to be the major source of FDI during Q1 of 2009-10 with a share of 48.9 per cent followed by USA at 12.8 per cent.
(vi) Portfolio investment primarily comprising foreign institutional investors’ (FIIs) investments and American Depository Receipts (ADRs)/Global Depository Receipts (GDRs) witnessed a sharp turnaround from net outflows of US$ 2.7 billion in Q4 of 2008-09 to net inflows of US$ 8.3 billion during Q1 of 2009-10. During 2009-10, the sharp increase in FII inflows could be attributed to the recovery of domestic stock market in line with international stock markets, better corporate performance, political stability and comparatively better growth prospects.
(vii) The tightness in liquidity in the overseas markets continued during Q1 of 2009-10. The approvals of external commercial borrowings (ECBs) were very low in the first two months of 2009-10, however, it recovered during June 2009. In addition, repayments of ECBs were higher at US$ 2.1 billion during Q1 of 2009-10 (US$ 1.1 billion during Q1 of 2008-09) resulting in net outflows of US$ 0.4 billion under ECBs (inflows of US$ 1.5 billion in Q1 of 2008-09).
(viii) The gross disbursements of short-term trade credit was US$ 10.1 billion during Q1 of 2009-10 almost same in Q1 of 2008-09. The repayments of short-term trade credits, however, were very high at US$ 13.2 billion in Q1 of 2009-10 (US$ 7.8 billion in Q1 of 2008-09). As a result, there were net outflows of US$ 3.1 billion under short-term trade credit during Q1 of 2009-10 (inflows of US$ 2.4 billion in Q1 of 2008-09).
(ix) Banking capital mainly consists of foreign assets and liabilities of commercial banks. NRI deposits constitute major part of the foreign liabilities. Banking capital (net), including NRI deposits, were negative at US$ 3.4 billion during Q1 of 2009-10 as against a positive net inflow of US$ 2.7 billion during Q1 of 2008-09. Among the components of banking capital, NRI deposits witnessed higher inflows of US$ 1.8 billion in Q1 of 2009-10 (net inflows of US$ 0.8 billion in Q1 of 2008-09) reflecting the positive impact of the revisions in the ceiling interest rate on NRI deposits.
(x) Other capital includes leads and lags in exports, funds held abroad, advances received pending for issue of shares under FDI and other capital not included elsewhere (n.i.e.). Other capital recorded net outflows of US$ 1.6 billion in Q1 of 2009-10.

Balance of Payments (BoP)

Merchandise Trade

Exports
(i) The decline in exports which started since October 2008 continued during the first quarter of 2009-10. On a BoP basis, India’s merchandise exports recorded a decline of 21.0 per cent in Q1 of 2009-10 as against an increase of 43.0 per cent in Q1 of 2008-09.

(ii) As per the data released by the Directorate General of Commercial Intelligence and Statistics (DGCI&S), merchandise exports declined by 26.4 per cent in Q1 of 2009-10 as against a higher growth of 37.4 per cent in Q1 of 2008-09, reflecting fall in demand worldwide due to the global economic crisis.

INDIA’s cumulative value of exports for the period April- August, 2009 was US$ 64129 million (Rs. 311715 crore) as against US $ 92959 million (Rs. 391841 crore) registering a negative growth of 31 per cent in Dollar terms and 20.4 per cent in Rupee terms over the same period last year. Cumulative value of imports for the period April- August 2009 was US$ 102300 million (Rs. 497108 crore) as against US$ 153691 million (Rs. 648041 crore) registering a negative growth of 33.4 per cent in Dollar terms and 23.3 per cent in Rupee terms over the same period last year. Oil imports during April- August, 2009 were valued at US$ 28275 million which was 47.4 per cent lower than the oil imports of US $ 53742 million in the corresponding period last year. Non-oil imports during April- August, 2009 were valued at US$ 74024 million which was 25.9 per cent lower than the level of such imports valued at US$99949 million in April- August, 2008. The trade deficit for April- August, 2009 was estimated at US $38171 million which was lower than the deficit of US $ 60732 million during April-August, 2008.   EXPORTS & IMPORTS (April-August, FY 2009-10)     In $ Million In Rs Crore Exports including re-exports 2008-09 92959 391841 2009-10 64129 311715 Growth 2009-10/2008-2009 (percent) -31.0 -20.4 Imports 2008-09 153691 648041 2009-10 102300 497108 Growth 2009-10/2008-2009 (percent) -33.4 -23.3 Trade Balance 2008-09 -60732 -256200 2009-10 -38171 -185393 Figures for 2008-09 and 2009-10 are provisional   The trade deficit for April- June, 2009 was estimated at $ 15504 million which was lower than the deficit at $ 28642 million during April- June, 2008. Source: Federal Ministry of Commerce, Government of India

Imports

(i) Import payments, on a BoP basis, also continued its declining trend. Imports declined by 19.6 per cent in Q1 of 2009-10 as against a positive growth of 42.9 per cent in Q1 of 2008-09.

(ii) According to the data released by the DGCI&S, the decline in imports is mainly attributed to the sharp fall in oil import payments due to lower crude oil prices during Q1 of 2009-10 (US$ 63.9 per barrel in Q1 of 2009-10 as against US$ 119 per barrel in Q1 of 2008-09). POL imports recorded a sharp decline of 56.9 per cent during Q1 of 2009-10 as against a sharp increase of 74.2 per cent during Q1 of 2008-09. As per the data released by the Ministry of Petroleum & Natural Gas, Government of India, POL imports showed a decline of 45.1 per cent during Q1 of 2009-10 despite a quantity growth of 10 per cent mainly due to lower crude oil price.

(iii) According to the DGCI&S data, out of the total decline in imports of US$ 26.7 billion in Q1 of 2009-10 over the corresponding previous quarter, oil imports declined by US$ 16.8 billion (share of 63.1 per cent in the decline in total imports during Q1 of 2009-10 as against 59.8 per cent share in total increase in imports during Q1 of 2008-09), while non-oil imports decreased by US$ 9.8 billion (share of 36.9 per cent in the decline in total imports  during Q1 of 2009-10 as against 40.2 per cent share in total increase in imports during Q1 of 2008-09).

Inflows & Outflows from NRI Deposits and Local Withdrawals (In $ million)
	Inflows	Outflows	Local Withdrawals
2006-07 (R)	19914	15593	13208
2007-08 (PR)	29401	29222	18919
2008-09 (P)	37,089	32,799	20,617
2008-09 (Q1) (PR)	9063	8249	5157
2009-10 (Q1) (P)	11172	9354	5568
P: Preliminary, PR: Partially revised. R: revised SOURCE: Reserve Bank of India report India's Balance of Payments Developments during the First Quarter (April-June 2009) of 2009-10

 Variation in Reserves
(i) The increase in foreign exchange reserves on a BoP basis (i.e., excluding valuation) was US$ 115 million in Q1 of 2009-10 (as against an accretion to reserves of US$ 2,235 million in Q1 of 2008-09) . However, the foreign exchange reserves including valuation increased by US$ 13.2 billion during Q1 of 2009-10 implying that the increase in reserves during this period was mainly due to valuation gains as the US dollar has depreciated against major currencies. [A Press Release on the sources of variation in foreign exchange reserves is separately issued]. (ii) At the end of June 2009, outstanding foreign exchange reserves stood at US$ 265.1 billion

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