India recorded a current account surplus of $7.1 billion, equivalent to 0.7% of GDP, in the January–March quarter of FY26, according to data released by the Reserve Bank of India (RBI). The data shows a sharp shift from the $13.2 billion deficit seen in the previous quarter, and it even surpassed forecasts.
The surplus reflected resilience in India’s external sector despite the continued merchandise trade deficit. Analysts had anticipated a deficit for the current quarter.
According to a Bank of Baroda report, “There is an element of positive surprise in the current account driven by remittances, which went up by 17% QoQ to $41.2 billion. Apart from this, the goods deficit moderated to $83 billion in Q4 from $96 billion in Q3. Both of these, put together, explain the surplus in Q4 against the deficit in Q3. Within invisibles, outgo on account of investment income is lower at $11 billion in Q4 compared with $12 billion in Q3.”
Growth in services exports contributed most significantly to the surplus. Computer and business services have been in high demand in India and have contributed positively to its export receipts.
There was a significant increase in net service receipts of $60.4 billion for the quarter, providing a good buffer against India's merchandise trade deficit. Personal transfer receipts climbed to $43.5 billion in Q4 FY26, up from $33.9 billion a year earlier. The steady flow of money from Indians working abroad helped strengthen secondary income inflows and offset external pressures.
However, capital outflows from foreign portfolio investments continued to be a concern. Suggesting that the instability of global markets is still a danger to India’s international trade.
While the positive balance in Q4 reflects the country's ability to maintain stable export revenues from services and foreign remittances, many economists have reservations about the country's future prospects.
The rise in fuel prices, geopolitical instability, and the global financial state could result in a larger current account deficit in the fiscal year 2027. In FY26, India’s current account deficit stood at $25.2 billion or 0.6% of the GDP.
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