India’s CAD widens to $4.2 billion in Q1FY27

Account subscription benefits alongside Premium Stories, Editorials, Opinions and more. Unlock these with Subscription

India’s current account deficit (CAD) widened to $4.2 billion, or 0.5% of GDP, in the first quarter of 2026-27, compared with $3.4 billion, or 0.4% of GDP, in the year-ago period, according to preliminary data released by the Reserve Bank of India (RBI) on Tuesday.

The widening deficit was primarily driven by a higher merchandise trade gap, which increased to $86.1 billion in Q1 FY27 from $68.9 billion in the corresponding quarter of 2025-26.

However, stronger services earnings and higher remittance receipts provided some cushion. Net services receipts rose to $51.6 billion during the quarter from $47.9 billion a year earlier. Services exports recorded year-on-year growth across major segments, including computer services, other business services and transportation services.

The net outgo under the primary income account declined to $10.5 billion in Q1 FY27 from $13.3 billion in the year-ago quarter, mainly reflecting lower investment income payments, the RBI said.

Personal transfer receipts under the secondary income account, largely comprising remittances from Indians employed overseas, increased sharply to $42.9 billion from $33.2 billion a year earlier.

On the financial account, net foreign direct investment (FDI) inflows rose to $6.1 billion in Q1 FY27 from $5.2 billion in Q1 FY26.

Foreign portfolio investment (FPI), however, recorded a net outflow of $9.6 billion during the quarter, reversing a net inflow of $1.6 billion in the corresponding period last year.

Net inflows into non-resident deposits stood at $2.8 billion, lower than the $3.6 billion recorded in Q1 FY26. Net inflows under external commercial borrowings (ECBs) also moderated to $3.3 billion from $4.4 billion a year earlier.

India’s foreign exchange reserves declined by $8.1 billion on a balance-of-payments basis during Q1 FY27, compared with an accretion of $4.5 billion in the same quarter of the previous year, according to the RBI.

economy, business and finance / trade balance / international (foreign) trade

Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.

We have migrated to a new commenting platform. If you are already a registered user of The Hindu and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.