India’s balance of payments position during the first quarter of 2008-09 (April-June) reflected a widening of the current account deficit and moderation in capita flows. Info Prod , citing official figures, claimed merchandise trade deficit recorded a sharp increase during April-August 2008 on account of sustained increase in demand for oil imports. Net surplus under invisibles remained buoyant, led by increase in software exports and private transfers.

The large increase in merchandise trade deficit led to a significant increase in the current account deficit over its level during April-June 2007. Net capital inflows have remained volatile during 2008-09 so far. While foreign direct investment into India increased during April-August 2008, portfolio investments showed an outflow during April-October 2008 (up to October 10, 2008).