India's Current Account Deficit Narrows: A Focus on Services Export Surge
India's current account deficit narrowed to 0.2% of GDP during April-June 2025-26, driven by growth in services exports. In contrast to a surplus in the previous quarter, the account balance showed improvement, with significant increases in net services receipts and personal transfer receipts, despite a higher merchandise trade deficit.
- Country:
- India
India's current account deficit sharply narrowed to just 0.2% of GDP, amounting to USD 2.4 billion in the first quarter of 2025-26, the Reserve Bank of India announced on Monday. This marks a significant improvement from the 0.9% deficit recorded during the corresponding period last year.
The contraction was largely supported by a robust performance in services exports, with notable year-on-year rises in sectors such as business and computer services. Personal transfer receipts, predominantly remittances from Indians working abroad, also saw a substantial increase, further contributing to the narrowed deficit.
Despite the higher merchandise trade deficit recorded at USD 68.5 billion this quarter, other elements like foreign direct investment and portfolio investment registered net inflows, indicating stable financial account health. However, the net outflow of primary income increased, highlighting higher payments for investment income.
(With inputs from agencies.)
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