Increased remittances from Indians abroad and higher software services exports have helped contain the current account deficit in the balance of payments despite rising trade deficit.

Preliminary figures released by the Reserve Bank of India show that the current account deficit remained flat at $16.9 billion during the quarter ended September 2011, the same level as in the quarter a year ago.

Total merchandise trade deficit rose 19 per cent to $44 billion during the quarter from $37 billion during the previous comparable quarter. As a percentage of GDP, current account deficit as of end-September was marginally lower at 3.6 per cent of the GDP, compared to 3.7 per cent in the year-ago period.

Service sector surplus as reflected in invisibles in the balance of payments, however, was lower at $27 billion ($20 billion) on higher software income and remittances by the overseas Indians.

Both software services income and remittances rose 25 per cent during the quarter to $15 billion and $16.2 billion, respectively. But investment income - largely comprising returns from deploying foreign exchange reserves - continued to dip on account of a benign interest rate environment globally.

Overall balance of payments that include both current and capital account transactions for the quarter ended in a lower surplus of $276 million ($3.3 billion) due to lower capital account surplus of $18.4 billion ($21.6 billion).

On a balance of payments (BoP) basis, merchandise exports recorded a growth of 47.2 per cent (year-on-year) during second quarter of 2011-12 as against an increase of 20.1 per cent during the corresponding quarter of 2010-11. Similarly, on a BoP basis, imports registered a growth of 35.4 per cent (year-on-year) during the quarter as against an increase of 21.9 per cent during same quarter last year.

Services receipts recorded a growth of 9.3 per cent (year-on-year), led by software, travel and transportation. Services payments, however, declined by 3.9 per cent to $18.50 billion during the quarter from $19.20 billion in corresponding quarter of last year.

While net secondary income (private transfers) receipts remained buoyant at $16.20 billion, primary income account (investment income) continued to show a net outflow.

The financial account surplus moderated in the second quarter of 2011-12 primarily on account of outflow of portfolio investment. ''There was, thus, a negligible accretion to foreign exchange reserves ($300 billion) during the second quarter of 2011-12 (excluding valuation),'' the RBI said.