What is current account surplus?
ESERVE Bank of India (RBI) statistics show that India has a current account surplus. But what does current account mean? We do business with other countries in goods and services and this is collectively called as current account transaction. Besides such activity, Indian firms invest abroad. Similarly, foreign companies and individuals invest in India. The income received or paid on such investments also forms part of the current account transaction. Just as we struggle to balance our individual receipts and payments every month, the country seldom balances its current account. There is either a current account surplus or a deficit. Current account surplus means that a country’s export of goods and services is more than its imports. Current account is also closely related to capital account. The latter refers to transactions with foreigners involving real estate, stocks, bonds and loans. Both current and capital accounts constitute a country’s balance of payments. Suppose a country is
