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Current account balance posts surplus of 1.3% of GDP in Q4FY25: RBI
India's current account balance posted a surplus of $13.5 billion, or 1.3 per cent of gross domestic product (GDP), during the fourth quarter ended March 2025 (Q4FY25). This surplus, after three consecutive quarters of deficit, reflects the contribution of a surge in services exports, latest data released by the Reserve Bank of India (RBI) showed.
There was a current account surplus of $4.6 billion (0.5 per cent of GDP) during the fourth quarter of the previous financial year (Q4FY24). The current account deficit (CAD) was $11.3 billion (1.1 per cent of GDP) during the quarter ended December 2024 (Q3FY25).
For FY25, the CAD moderated to $23.3 billion (0.6 per cent of GDP) from $26 billion (0.7 per cent of GDP) in FY24, supported by higher net invisible receipts.
Aditi Nayar, chief economist, ICRA, said while the current account balance had been expected to post a seasonal surplus in Q4FY25, the size of the surplus exceeded expectations due to a surprise dip in primary income outflows during the quarter. This led to the unexpected narrowing of the CAD to 0.6 per cent of GDP in FY25 from 0.7 per cent in FY24.
Elaborating on the quarterly trends, the RBI said in a statement that net services receipts stood at $53.3 billion in Q4FY25, up from $42.7 billion a year ago. This contributed significantly to the surplus in the current account during the quarter.
The merchandise trade deficit was $59.5 billion in Q4FY25, higher than $52.0 billion in Q4FY24, but lower than the $79.3 billion recorded in Q3FY25.
Net outgo on the primary income account—mainly reflecting investment income payments—moderated to $11.9 billion in Q4FY25 from $14.8 billion in Q4FY24. Private transfer receipts, largely comprising remittances by Indians employed overseas, rose to $33.9 billion from $31.3 billion a year earlier, the RBI added.
On the foreign exchange front, the RBI said accretion to forex reserves was $8.8 billion in Q4FY25, significantly lower than the $30.8 billion recorded in Q4FY24.
For the full fiscal, FY25 saw a depletion of $5 billion in reserves, compared to an accretion of $63.7 billion in FY24, according to RBI data.
Looking ahead, ICRA expects the current account to revert to a deficit in the ongoing quarter ending June 2025 (Q1FY26), printing at around 1.3 per cent of GDP. The expected reversal is driven by a likely widening in the merchandise trade deficit and a moderation in the services trade surplus in Q1FY26 versus Q4FY25.
India's current account deficit is expected to average 1 per cent of GDP in FY26, which remains eminently manageable despite prevailing global uncertainties. This projection assumes an average crude oil price of around $70 per barrel for the fiscal, the rating agency added.
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