Mumbai: India’s current account reversed to a deficit in the April-June quarter on the back of a higher merchandise trade deficit, the Reserve Bank of India said in a statement on Monday. The current account deficit (CAD) stood at $2.4 billion, or 0.2 per cent of GDP, in the first quarter of the fiscal year 2025-26, compared with a surplus of $13.5 billion, or 1.3 per cent of GDP, in the preceding quarter.
CAD is a measurement of a country’s trade where the value of the goods and services it imports exceeds the value of the products it exports. Even as the merchandise trade deficit widened to $ 68.5 billion in Q1:2025-26 ($ 63.8 billion in Q1:2024-25) the net services receipts provided a cushion as they increased to $ 47.9 billion in Q1:2025-26 from $ 39.7 billion a year ago. Services exports have risen on a y-o-y basis in major categories such as business services and computer services, said the RBI.
India had recorded a CAD of $8.6 billion, or 0.9 per cent of GDP, in the same quarter a year ago. For 2024-2025, India logged a current account deficit of $23.3 billion (0.6 per cent of GDP) compared to 26 billion (0.7 per cent) posted in FY24 aided by strong services receipts.
Net outgo on the primary income account rose to $12.8 billion from $10.9 billion, reflecting higher investment income payments. Personal transfer receipts, mainly remittances from Indians verseas, also rose sharply to $33.2 billion, compared with $28.6 billion in the same quarter last year.
Meanwhile, the RBI is gradually shifting the composition of its foreign exchange reserves, leaning more on gold and reducing its exposure to US Treasury bills (USTs). According to reports, India’s investments in US Treasury bills fell to $227 billion in June 2025, compared with $242 billion a year earlier. Over the same period, the RBI added 39.22 metric tonnes of gold, taking India’s total holdings to 879.98 tonnes as of June 27, 2025. Despite this reallocation, the overall reserves remain robust at $690 billion as of August 22, 2025, ensuring India still has a significant dollar cushion.
