India Records $13.5 Billion Current Account Surplus in Q4FY25: RBI

India registered a significant improvement in its external balance as the country posted a current account surplus of $13.5 billion for the March quarter (Q4) of FY25. This data reflects a sharp turnaround from a deficit in Q3, driven mainly by higher service exports and increased remittance inflows from overseas workers.

Current Account Surplus: Strong Q4 Performance Amid Trade Deficit

India saw a sharp improvement in its external financial position, posting a current account surplus of $13.5 billion in the March quarter (Q4FY25), as per the RBI’s Balance of Payments report. This surplus was equal to 1.3% of GDP, up from a $4.6 billion surplus (0.5% of GDP) in Q4FY24 and a notable turnaround from the $11.3 billion deficit (1.1% of GDP) in Q3FY25.

While the merchandise trade deficit remained high at $59.5 billion in Q4FY25, it was lower than the $79.3 billion gap seen in the previous quarter.

The Balance of Payments is a key measure of a country’s external financial health.

Boost from Services Exports and Remittances

Net services receipts climbed to $53.3 billion, compared to $42.7 billion in Q4FY24. Key drivers included increases in business and computer service exports. Personal transfer receipts, primarily remittances by Indian workers abroad, rose to $33.9 billion from $31.3 billion year-on-year, strengthening the invisibles account.

Decline in Primary Income Outgo and Investment Trends

The net outgo on the primary income account eased to $11.9 billion, down from $14.8 billion in Q4FY24. However, net foreign direct investment (FDI) inflow fell significantly to just $400 million, compared to $2.3 billion in the same period last year. Additionally, foreign portfolio investment (FPI) witnessed a net outflow of $5.9 billion, reversing a net inflow of $11.4 billion a year earlier.

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Annual Current Account Balance Shows Deficit

For the full fiscal year 2024-25, the current account showed a deficit of $23.3 billion, equivalent to 0.6% of GDP. This was a slight improvement from the $26 billion (0.7% of GDP) deficit in FY24, attributed to stronger net invisibles, which partially offset the trade shortfall. Net FDI inflow during the year was $1 billion, substantially below the $10.2 billion figure recorded in FY24. FPIs recorded a net inflow of $3.6 billion in FY25, a sharp decline from $44.1 billion in the previous year.

Foreign Exchange Reserve Accretion Declines

India’s foreign exchange reserves rose by $8.8 billion on a BoP basis during Q4FY25, slower than the $30.8 billion accretion in Q4FY24. Lower FPI inflows and reduced FDI contributions impacted the financial account, even as current account performance improved.

Conclusion

India's current account surplus of $13.5 billion in Q4FY25 underscores a strong external performance led by robust service exports and remittances. While the annual figures still reflect a modest deficit, the Q4 turnaround offers optimism. 

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