Current Account Back in Deficit, 0.2% in Q1

Current quarter may see higher CAD, weaker capital account

- FE BUREAU

INDIA'S CURRENT ACCOUNT balance recorded a deficit of $2.4 billion or 0.2% of the gross domestic product (GDP) in Q1FY26 as compared with a deficit of $8.6 billion (0.9%) in the year-ago quarter and a surplus of $13.5 billion (1.3%) in Q4FY25, the RBI said on Monday.

Despite the rather benign CAD, on a balance of payments basis, just $4.5 billion accrued to the foreign exchange reserves in the April-June quarter of the current financial year, as capital inflows remained subdued. Q1FY25 saw accretion of $5.2 billion to reserves, while the same in Q4FY25 was $8.8 billion.

Merchandise trade deficit at $68.5 billion in Q1 was higher than $63.8 billion in the corresponding period a year ago. In the current quarter (July-September), the trade gap could be higher — in July, it stood at $27.35 billion, much higher than $18.7 billion in June.