India returns to current account deficit in Q1, RBI data shows

India’s current account swung back into deficit in the April–June quarter, as a wider merchandise trade gap offset resilient services exports, the Reserve Bank of India said on Monday.

The deficit stood at $2.4 billion, or 0.2% of GDP, in the first quarter of FY26. This marked a reversal from the $13.5-billion surplus (1.3% of GDP) recorded in January-March, which had comfortably beaten expectations.

A year ago, in Q1 FY25, the deficit had been deeper at $8.6 billion (0.9% of GDP).

For the full financial year FY25, India logged a current account deficit of $23.3 billion (0.6% of GDP), an improvement over the $26 billion (0.7% of GDP) posted in FY24, aided by strong services receipts.

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India’s merchandise trade deficit stood at $68.5 billion in Q1FY26, widening from $63.8 billion a year ago, according to RBI data.

Services provided a cushion, with net receipts climbing to $47.9 billion from $39.7 billion in Q1FY25, led by strong growth in business and computer services exports.

Net outgo on the primary income account rose to $12.8 billion from $10.9 billion, reflecting higher investment income payments.

Personal transfer receipts, mainly remittances from Indians overseas, also rose sharply to $33.2 billion, compared with $28.6 billion in the same quarter last year.

Capital flows remained supportive. Net foreign direct investment inflows came in at $5.7 billion in April-June, compared with $6.2 billion a year earlier, while net portfolio investment inflows rose to $1.6 billion from $0.9 billion.

First Published: Sept 1, 2025 6:25 PM IST

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