Record $20 billion current account surplus likely this fiscal

Direct Benefit Transfer to the poor rather than subsidising the rates under the proposed power sector reforms. However, there has been no decision yet on this," said Vipula Sharma, director, ratings, Brickwork Ratings.

According to Chowdhury, DBT transfers will not prevent power bills from going up. "We have seen this in the case of LPG cylinders. Despite petroleum prices falling sharply and subsidies coming under DBT, the LPG bills have gone up," he said.

However, Vibhuti Garg, economist, IISD/India lead- IEEFA believes there's no need to jump the gun now. "The National Tariff Policy is not yet out. This will give us more clarity on what would be the terms and conditions while privatising discoms and whether government will regulate power tariffs," he said.

Despite an estimated 20 per cent decline in exports, India would see a record trade surplus of $20 billion this year as the subdued economic activity will shrink imports more.

As imports continue to plunge due to the Covid-19driven disruptions, India may end the current fiscal with a record current account surplus of about

$20 billion, according to an analysis by brokerage firm Barclays. The country will see a current account surplus after a gap of 14 years or since first quarter of

2006-07. Following the nationwide lockdown, both exports and imports plummeted to all-time lows in April— exports dropped 36.65 per cent in April while imports fell by 47.36 per cent leading to a trade surplus of

0.16 billion.

"Our current account tracker points to a small current account deficit of

$3 billion in Q1, followed by successive 'unwelcome' surpluses, mirroring subdued economic activity. Given this, we raise our account surplus forecast to

$19.6 billion or 0.7 percent of GDP for FY21, up from $10 billion previously forecast," Barclays said.

It is an unwelcome development as the surplus will be driven almost entirely by the lockdown of the economy to contain the pandemic outbreak, and helped by the plunge in crude prices and not by excess exports earnings over imports.

According the Federation of Indian Export Organisations, the to export from the country is expected to fall by 20 per cent in the current fiscal. "We expect that export during the current financial year is likely to fall by 20 per cent. In value terms, this will be around $50 to 60 billion," Fieo director general and chief executive officer Ajay Sahai said on Tuesday. "Personally, I feel there has been not a single word on exports in the economic stimulus announced by the government," he added.

On the other hand, both oil and non-oil imports will be shrinking this year. Oil consumption eased in March and collapsed in April, falling to 55 percent of the past year's average. The gold import bill has also shrunk.