Daijiworld Media Network – New Delhi
New Delhi, Jun 27: India registered a significant current account surplus of USD 13.5 billion, equivalent to 1.3% of the GDP, in the March quarter of the financial year 2024-25, according to data released by the Reserve Bank of India (RBI) on Friday. This marks a sharp rise from the USD 4.6 billion surplus reported during the same period last year, primarily driven by robust services exports and higher remittances from abroad.
Despite the quarterly boost, India recorded a current account deficit of USD 23.3 billion (0.6% of GDP) for the full year 2024-25, slightly lower than the previous year’s deficit of USD 26 billion.
The RBI report titled "India’s Balance of Payments during the Fourth Quarter (January-March) of 2024-25" indicated that while the merchandise trade deficit widened to USD 59.5 billion in Q4 from USD 52 billion in the same quarter a year earlier, it had moderated from USD 79.3 billion in Q3 of 2024-25.
Net services receipts rose to USD 53.3 billion, up from USD 42.7 billion last year, buoyed by gains in business and computer services. Personal transfers, mainly overseas remittances, also grew to USD 33.9 billion from USD 31.3 billion.
Primary income outflows, largely related to investment income, eased to USD 11.9 billion in Q4, down from USD 14.8 billion a year ago. However, foreign direct investment (FDI) inflows dropped sharply to just USD 400 million in the quarter, compared to USD 2.3 billion last year. Foreign portfolio investment (FPI) saw a net outflow of USD 5.9 billion, reversing last year’s net inflow of USD 11.4 billion.
India’s foreign exchange reserves rose by USD 8.8 billion during the quarter, although this was significantly lower than the USD 30.8 billion accretion recorded in Q4 of 2023-24.
For the full fiscal year 2024-25, FDI inflows stood at USD 1 billion, much lower than USD 10.2 billion in 2023-24. FPI inflows also declined sharply to USD 3.6 billion, from USD 44.1 billion in the previous fiscal.
Aditi Nayar, Chief Economist at ICRA, noted that while the surplus in Q4 was larger than anticipated due to lower-than-expected primary income outflows, the current account may revert to a deficit in the first quarter of FY2025-26 owing to an expected rise in the trade gap and weaker services exports.