India's current account deficit in Q1 FY27 surges to $4.2B
What's the story
India's current account deficit (CAD) widened to $4.2 billion in the first quarter of FY27, up from $3.4 billion during the same period last year. The widening was mainly due to a higher merchandise trade deficit, according to data released by the Reserve Bank of India (RBI) today. The CAD now stands at 0.5% of GDP for April-June period, compared to 0.4% earlier.
Trade imbalance
Merchandise trade deficit ballooned to $86.1B
The merchandise trade deficit ballooned to $86.1 billion, from $68.9 billion in the year-ago quarter. This was mainly due to a 26% increase in the oil import bill, which stood at $49 billion for FY27's first quarter despite an 18% contraction in oil import volumes.
Economic inflows
Net services receipts increased to $51.6B
Despite the widening CAD, net services receipts increased to $51.6 billion from $47.9 billion a year ago.
This growth was supported by higher exports of computer services, other business services, and transportation services.
In the financial account, foreign direct investment recorded a net inflow of $6.1 billion in Q1 FY27, up from $5.2 billion during the same period last year.
Investment trends
Foreign portfolio investment recorded net outflow of $9.6B
However, foreign portfolio investment recorded a net outflow of $9.6 billion against a net inflow of $1.6 billion, pushing the capital account into deficit. Non-resident deposits saw a net inflow of $2.8 billion compared to $3.6 billion earlier in the same period last year.