India's Current Account Posts $7.1 Billion Surplus in Q4 FY26

India ended the final quarter of FY26 on a stronger external sector footing, with the current account returning to surplus territory.  

Higher inflows from services exports and overseas remittances helped offset pressures from merchandise trade, resulting in a positive balance during the January-March period. 

Services and Remittances Strengthen External Position 

According to the latest data released by the Reserve Bank of India (RBI), India reported a current account surplus of $7.1 billion in Q4 FY26, equivalent to 0.7% of GDP.  

This marked a significant turnaround from the current account deficit of $13.2 billion, or 1.3% of GDP, recorded in the previous quarter. 

A major contributor was the rise in net services receipts, which increased to $60.4 billion from $53.3 billion a year earlier.  

Growth in computer services and other business services supported the expansion in services exports. 

Another key driver was personal transfer receipts, largely representing remittances sent home by Indians working abroad.  

These inflows reached a record $43.5 billion during the quarter, compared with $33.9 billion in the corresponding period of the previous year. 

Capital Flows Remain Mixed Despite Improvement in FDI 

Foreign direct investment showed improvement during the quarter, with net inflows rising to $4.2 billion from $400 million a year earlier.  

Non-resident Indian deposits also increased, reaching $3.3 billion compared with $2.8 billion in the year-ago period. 

However, foreign portfolio investors remained net sellers, resulting in outflows of $12 billion during the quarter, higher than the $5.9 billion outflow recorded a year earlier.  

Net inflows through external commercial borrowings also moderated to $3.6 billion from $7.5 billion. 

The balance of payments recorded a surplus of $7.2 billion in Q4 FY26, recovering from a deficit of $24.4 billion in the previous quarter. 

Full-Year Deficit Remains Stable Relative to GDP 

Despite the quarterly surplus, India finished FY26 with a current account deficit of $25.2 billion, compared with $22.9 billion in FY25. As a share of GDP, the deficit remained stable at 0.6%. 

On an annual basis, net FDI inflows increased to $6.9 billion in FY26 from $1 billion in FY25.  

In contrast, foreign portfolio investors recorded net outflows of $16.4 billion during FY26, compared with net inflows of $3.6 billion in the previous year. 

Read More: India Maintains Adequate 80 Days of Coal Reserves for Power Generation Amid Monsoon Disruptions: Union Minister Kishan Reddy! 

Conclusion 

India's external account strengthened considerably in the final quarter of FY26, supported by robust services exports and record remittances. While the full-year current account remained in deficit, the stable deficit-to-GDP ratio and improved quarterly performance indicate resilience in the country's external sector amid a challenging global environment. 

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