The Reserve Bank of India (RBI) has released preliminary data on India’s Balance of Payments (BoP) for Q1 of FY2025–26. The current account deficit (CAD) narrowed to US $2.4 billion (0.2% of GDP), compared with US $8.6 billion (0.9%) in the same quarter last year, while the previous quarter recorded a surplus of US $13.5 billion.
Within the BoP, the merchandise trade deficit widened to US $68.5 billion, but higher services receipts (US $47.9 billion, up from US $39.7 billion) and strong remittance inflows (US $33.2 billion, up from US $28.6 billion) provided offsetting support. Primary income outflows rose to US $12.8 billion. On the capital account, net inflows of US $3.2 billion were led by FDI (US $5.7 billion), FPI (US $1.6 billion), external commercial borrowings (US $3.7 billion), and NRI deposits (US $3.6 billion). Overall, foreign exchange reserves increased by US $4.5 billion during the quarter.
Relevant question for policy stakeholders: How can India further reduce current account vulnerabilities by diversifying exports and sustaining remittance flows amid global uncertainty?
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