India posted a current account surplus of $13.5 billion in the January–March quarter (Q4 FY25), equivalent to 1.3% of GDP, according to data released by the Reserve Bank of India (RBI). This marks a sharp turnaround from a $11.3 billion deficit in the previous quarter and is the highest quarterly surplus in over a decade.
📈 Key Drivers Behind the Surplus
The surplus was primarily driven by:
- Robust services exports, especially in software and business consulting, with net services receipts rising to $53.3 billion, up from $42.7 billion a year ago.
- A decline in primary income outflows, which fell to $11.9 billion from $14.8 billion in Q4 FY24.
- Higher remittances, with personal transfer receipts increasing to $33.9 billion, compared to $31.3 billion in the same period last year.
📉 Trade Deficit Still a Concern
Despite the surplus, India’s merchandise trade deficit widened to $59.5 billion in Q4 FY25, up from $52.0 billion in Q4 FY24. However, it was lower than the $79.3 billion recorded in Q3 FY25, indicating some improvement.
💰 Full-Year FY25 Current Account Snapshot
- FY25 Current Account Deficit (CAD): $23.3 billion (0.6% of GDP), down from $26 billion (0.7%) in FY24.
- Forex Reserves: Net depletion of $5 billion in FY25, compared to an accretion of $63.7 billion in FY24.
- FDI Inflows: Slumped to $1.0 billion in FY25 from $10.2 billion in FY24.
- FPI Inflows: Dropped to $3.6 billion, down from $44.1 billion in the previous year.
🔮 Outlook for FY26
Analysts expect the current account to revert to a deficit in Q1 FY26, driven by a likely widening trade gap and moderation in services exports. ICRA projects the CAD to average 1% of GDP in FY26, assuming crude oil prices remain around $70 per barrel.
Stay tuned for more updates on India’s external sector performance.
