On the basis of exports and remittances, India’s current account was seen in surplus in the fourth quarter.
According to Reserve Bank of India (RBI) data released on Monday, India recorded a current account surplus of $ 7.1 billion or 0.7 percent of GDP in the January-March quarter of fiscal year 2026. This surplus was due to strong growth in service exports and remittances (remittances sent from abroad). This surplus was less than $ 13.7 billion or 1.4 percent of GDP recorded in the same quarter last year.
The country’s merchandise trade deficit increased to $83.4 billion in this quarter, which was $59.3 billion a year ago. This was seen due to excessive imports. However, net service receipts (net income from services) increased from $53.3 billion to $60.4 billion due to growth in computer services and other business service exports, which offset this loss to some extent.
According to Central Bank data, remittances remained a mainstay of external stability. Personal transfer receipts (which mainly include money sent home by Indians working abroad) rose to $43.5 billion in the March quarter from $33.9 billion a year earlier. Meanwhile, net outgo under the primary income account declined to $11.1 billion from $11.9 billion, providing additional support to the current account balance.
Capital flow in the fourth quarter
- According to RBI data, net foreign direct investment (FDI) inflow stood at $4.2 billion in the quarter, which was more than $0.4 billion in the year-ago period.
- Foreign portfolio investors (FPIs) recorded net outflows of $12 billion in the March quarter, compared to $5.9 billion a year ago.
- Non-resident Indian (NRI) deposits recorded a net inflow of $3.3 billion, up from $2.8 billion in the corresponding quarter of FY20.
- Net inflow through External Commercial Borrowings (ECBs) stood at $3.6 billion, compared to $7.5 billion a year ago.
- Foreign exchange reserves on the basis of balance of payments increased by $ 7.2 billion in this quarter, compared to an increase of $ 8.8 billion in the year-ago period.
Balance of payment in the financial year
For fiscal year 2025-26, India’s current account deficit stands at $25.2 billion, which is 0.6 percent of GDP. In comparison, the deficit in fiscal year 2025 was $22.9 billion or 0.6 percent of GDP.
The merchandise trade deficit increased to $337.3 billion in the financial year 2025-26, which was $286.9 billion a year ago. Net income from services increased from $188.8 billion to $216.6 billion, while income from secondary income increased from $123.5 billion to $143.6 billion.
Net income from ‘net invisibles’ (services and other invisible items) in FY 2026 stood at $312 billion, which was more than $264 billion last year. The main reasons for this were net income from services and net personal transfers.
Capital flow in FY 2026
Net FDI inflows increased to $6.9 billion in FY2026, from $1 billion in FY25. There was a net outflow of $16.4 billion from FPI during FY26, compared to a net inflow of $3.6 billion last year. On a balance of payments basis, foreign exchange reserves declined by $23.6 billion in FY2026, compared to $5 billion in FY2025.
