India posted a surprise current account surplus of $7.1 billion (0.7% of GDP) in the January–March quarter of fiscal 2025-26, the Reserve Bank of India said on June 9, 2026, marking a sharp turnaround from a $13.2 billion deficit (1.3% of GDP) in the previous quarter. The outcome defied economists’ expectations that India would remain in deficit amid higher energy costs and geopolitical tensions in West Asia.
The rebound was driven largely by stronger services exports and a surge in private transfer receipts. Net services receipts rose to $60.4 billion in the March quarter, up from $53.3 billion a year earlier, with growth concentrated in computer services and other business services. These earnings helped offset a sharp deterioration in the merchandise trade balance, which saw the quarterly trade deficit widen to $83.4 billion from $59.3 billion a year earlier.
Remittances were another key support, with private transfer inflows climbing to $43.5 billion in January–March from $33.9 billion a year earlier. The rise in outward worker remittances eased concerns that the conflict in West Asia would significantly dent income flows from Indians employed in the region.
India’s balance of payments returned to a quarterly surplus of $7.2 billion, although the country recorded a full-year BoP deficit of $23.6 billion. For the entire fiscal year 2025-26, the current account deficit remained contained at $25.2 billion, or 0.6% of GDP-broadly in line with the previous year and below market expectations.
Analysts said part of the improvement reflected RBI interventions to support external stability: during January–March the central bank conducted two tranches of dollar–rupee buy-sell swaps worth $10 billion each. The quarterly gains came despite sizable foreign portfolio outflows of $12 billion, up from $5.9 billion a year earlier.
Economists warned that risks persist into FY27: higher crude prices and renewed escalation in West Asia could widen the import bill, while sustained foreign investor outflows could pressure the rupee and the broader balance of payments. Still, the March-quarter results suggest India entered FY27 from a position of relative strength, with services exports and remittance inflows continuing to provide an important buffer against external shocks.
Original Source: https://www.firstpost.com/business/india-current-account-surplus-q4-fy26-remittances-services-exports-rbi-balance-payments-14020289.html
Category: India
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Publish Date: 2026-06-09 05:35:00
