India's current account swings to deficit in Q1 FY26
What's the story
India's current account has swung to a deficit of $2.4 billion in the April-June quarter of FY26, according to data released by the Reserve Bank of India (RBI). The figure translates to 0.2% of the country's GDP. This is a sharp contrast from the previous quarter's surplus of $13.5 billion or 1.3% of GDP and a deeper deficit than last year's Q1, which stood at $8.6 billion or 0.9% of GDP.
Trade dynamics
Wider merchandise trade gap
The current account deficit in Q1 FY26 was mainly driven by a wider merchandise trade gap. The Q1 FY26 merchandise trade deficit was $68.5 billion. However, resilient services exports helped offset some of the impact of this wider trade gap on the overall current account balance for the quarter under review.
Financial inflows
Net services receipts surge
Net services receipts surged to $47.9 billion in Q1 FY26 from $39.7 billion a year ago, driven by growth in business and computer services exports. However, net outgo on the primary income account, largely reflecting investment income payments rose to $12.8 billion in Q1 FY26 from $10.9 billion a year ago.
Remittance inflows
Personal transfer receipts rose
Personal transfer receipts, mainly remittances from Indians working abroad, rose to $33.2 billion in Q1 FY26 from $28.6 billion a year ago. In the financial account, foreign direct investment (FDI) saw a net inflow of $5.7 billion in Q1 FY26 as against $6.2 billion last year. Meanwhile, foreign portfolio investment (FPI) recorded a net inflow of $1.6 billion as against last year's inflow of $0.9 billion during the same period under review.