However, the deficit, notes the Survey, will be more than matched by the expected net capital inflows which have been augmented by funds raised by the SBI from non-resident Indians/overseas corporate bodies through India Millennium Deposits of $ 5.51 billion during October-November 2000.

Consequently, RBI's foreign currency assets have increased by about $ 3.30 billion from $ 35.06 billion at end-March 2000 to $ 38.36 billion at end-January 2001.

The Survey says invisible inflows continued to maintain an upward trend in 1999-2000 and 2000-01 as well. In the first half of 2000-01, gross invisible receipts sustained their buoyancy with a 15 per cent growth at $ 15.45 billion. Taking into account invisible payments which have risen by about 17 per cent to $ 10.21 billion during the same period, the net inflows stood at $ 5.24 billion, a 12 per cent incover over April-September 1999. On the other hand, the Survey notes that non-oil imports have remained subdued so far and exports are expected to be buoyant as reflected by the 20.4 per cent growth posted in April-December 2000.

Last year (1999-2000), the balance of payments position was comfortable with the current account deficit being contained at 0.9 per cent of the GDP, despite an unfavourable international trade and a near two-third hike in the oil import bill.

The Survey says the net inflow of invisibles despite larger outflows on account of interest and dividend payments is expected to remain broadly at last year's level, supported by the continued buoyancy in software service exports and private transfers.

These software service exports had grown at an annual rate of over 50 per cent during the four years ending 1998-99 and the momentum was sustained in by posting a 53 per cent growth from $ 2.63 billion in 1998-99 to $ 4.02 billion in 1999-2000.

The Economic Survey says the strong export performance of software service exports in April-December 2000 has been facilitated by an anticipation of a more robust global economy, resurgence in world trade and improvements in world commodity prices in 2000.

In particular, the depreciation of the rupee in the current fiscal so far may also have strengthened the competitiveness of the exports in the global markets, the Survey says and points out that the increase in exports is all the more creditable despite the partial withdrawal of income-tax concessions in the 2000-01 Budget. The overall import growth at 9.0 per cent in April-December 2000 continues to be moderate compared to the 10.7 per cent growth recorded in the corresponding period of the preceding year.

The Survey notes that the during the above period, aggregate foreign direct investment inflows increased from $ 1489 million to $ 1916 million with Mauritius and the US being the largest FDI sources for India.

Looking ahead, the Survey says there is very little that any emerging economy can do to stop international shocks such as the Asian financial crisis, economic sanctions on India imposed by developed countries and the hike in international oil prices.

The adverse effect of these shocks can be overcome by further strengthening of the economic fundamentals. This requires the strengthening of the policies concerning fiscal balance, exports, POL imports, tourism earnings and FDI flows, the Survey says.