Mumbai: India’s current account deficit widened to USD 4.2 billion, or 0.5 per cent of GDP, in the first quarter of the fiscal year from USD 3.4 billion a year ago, as the merchandise trade deficit rose sharply amid the West Asia conflict.
According to the Reserve Bank’s data on India’s Balance of Payments, the merchandise trade deficit at USD 86.1 billion in the April-June period of 2026-27 was higher than USD 68.9 billion in the year-ago quarter.
“India’s current account deficit stood at USD 4.2 billion (0.5 per cent of GDP) in Q1:2026-27 as compared to USD 3.4 billion (0.4 per cent of GDP) in Q1:2025-26,” the central bank said.
A current account deficit (CAD) happens when a country spends more foreign currency on imports and other payments abroad than it earns from exports and other income from overseas.
The data further showed net services receipts increased to USD 51.6 billion in Q1 2026-27 from USD 47.9 billion a year ago.
“Services exports have risen on a year-on-year basis in major categories such as computer services, other business services and transportation services,” the RBI said.
Net outgo on the primary income account, mainly reflecting payments of investment income, decreased to USD 10.5 billion in Q1 2026-27 from USD 13.3 billion in the April-June quarter of 2025-26.
The RBI said personal transfer receipts under secondary income account, mainly representing remittances by Indians employed overseas, rose to USD 42.9 billion in the first three months of the current fiscal year from USD 33.2 billion in the corresponding period last year.
In the financial account, the RBI said foreign direct investment (FDI) recorded a net inflow of USD 6.1 billion, higher than USD 5.2 billion in Q1 2025-26.
On the other hand, foreign portfolio investment (FPI) recorded a net outflow of USD 9.6 billion in Q1 2026-27 against a net inflow of USD 1.6 billion in the year-ago quarter.
According to the data, non-resident deposits (NRI deposits) recorded a net inflow of USD 2.8 billion in Q1 2026-27, lower than USD 3.6 billion in Q1 2025-26.
Net inflows under external commercial borrowings (ECBs) to India too were lower in the first quarter compared to the year-ago period.
The central bank said foreign exchange reserves were depleted by USD 8.1 billion (on a BoP basis) in Q1 2026-27 against an accretion of USD 4.5 billion in Q1 2025-26.
Balance of Payments (BoP) is a record of all economic transactions between a country and the rest of the world over a given period.