Mumbai, Sep 1 (PTI) India's current account deficit (CAD) narrowed to 0.2 per cent of GDP, or USD 2.4 billion, during the April-June period of 2025-26 compared to 0.9 per cent of the GDP, or USD 8.6 billion, in the year-ago period, helped by services exports, the RBI said on Monday.

In the preceding January-March quarter, the current account was in a surplus of USD 13.5 billion (1.3 per cent of GDP).

"India's current account balance recorded a deficit of USD 2.4 billion (0.2 per cent of GDP) in Q1:2025-26 as compared with USD 8.6 billion (0.9 per cent of GDP) in Q1:2024-25 and against a surplus of USD 13.5 billion (1.3 per cent of GDP) in Q4:2024-25," according to India's balance of payments (BoP) data.

Current account reflects a country's overseas earnings and expenditures.

Merchandise trade deficit at USD 68.5 billion in the first quarter (Q1) of 2025-26 was higher than USD 63.8 billion in Q1, 2024-25.

However, net services receipts increased to USD 47.9 billion in Q1, 2025-26 from USD 39.7 billion a year ago. Services exports have risen on a year-on-year basis in major categories such as business services and computer services.

Similarly, personal transfer receipts, mainly representing remittances by Indians employed overseas, rose to USD 33.2 billion in Q1, 2025-26 from USD 28.6 billion in Q1, 2024-25.

In the financial account, foreign direct investment (FDI) recorded a net inflow of USD 5.7 billion in Q1, 2025-26 as compared to a net inflow of USD 6.2 billion a year ago, according to the BoP.

Further, foreign portfolio investment (FPI) recorded a net inflow of USD 1.6 billion in Q1, 2025-26 as compared to a net inflow of USD 0.9 billion in Q1, 2024-25.

The RBI said net inflows under external commercial borrowings (ECBs) to India amounted to USD 3.7 billion in Q1, 2025-26, as compared to USD 1.6 billion in the corresponding period a year ago.

NRI deposits recorded a lower net inflow of USD 3.6 billion during the quarter under review as against USD 4 billion in Q1, 2024-25, it said.

The net outgo on the primary income account, primarily reflecting payments of investment income, increased to USD 12.8 billion in Q1, 2025-26 from USD 10.9 billion in Q1, 2024-25, according to the data. PTI DP NKD TRB

Current account deficit narrows as services exports and remittances offset a wider merchandise trade deficit and support external balances. RBI BoP data shows the current account deficit narrowed to 0.2% of GDP in Q1:2025 26 due to higher net services receipts and increased personal remittances, despite a wider merchandise trade deficit. Financial account inflows remained supportive-FDI positive, FPI stronger, and higher external commercial borrowings-while NRI deposits moderated and primary income outgo increased, together shaping the external position.