India records $8.1 billion deficit in April-June balance of payments, June turns surplus

Kolkata: India's balance of payments has slipped into a deficit of $8.1 billion in the first quarter from $4.5 billion surplus in the year ago period, largely on account of dollar outflows in the capital account as overseas portfolio investors offloaded their investment from local markets in a risk-off strategy amid geopolitical turmoil.

The country's current account deficit widened in the first quarter to $3.1 billion from $2.9 billion in the year ago period while current account turned into deficit of $5 billion from a $7.4 billion surplus, data released by Reserve Bank of India on Friday showed.

Also read: RBI to close FCNR(B) forex swap facility early after strong dollar inflow


The merchandise trade deficit widened to $85.7 billion in the first quarter from $68.9 billion largely due to higher fuel bill.

The country's crude oil import bill rose 26% year-on-year to $49 billion in the first quarter of FY27 even as crude import volumes fell 18% following the disruption in supplies through Strait of Hormuz.

India, the third-largest crude oil importer globally, depends on foreign shipments for over 90% of its domestic fuel consumption.

Even a higher surplus from the services sector and remittances and gifts from abraod could not offset the impact of the higher fuel bill. The net services suplus stood at 52.2 billion agfainst $47.9 billion same period last year. The net transfer, which includes remittances, foreign aids and pension and gifts, stood at $41.4 billion as compared with $30.9 billion over the same period.

On the capital account side, the net foreign direct investment grew to $7.8 billion in the period under review from $4.8 billion a year prior. However, a net $9.6 billion outflow during the quarter on account of the withdrawal of investments by foreign portfolio investors (FPI) from the local markets turned the balance of payments math unfavourably. India recorded a net FPI inflows of $1.6 billion in the year prior.

Net external borrowing was also negative at $0.1 billion against $5.3 billion surplus in the year-ago period.