India’s current account deficit widens to $4.2 billion in Q1 FY27

India's current account deficit widened to $4.2 billion in the first quarter of the fiscal from $3.4 billion in the year-ago period on account of higher merchandise trade deficit, data released by Reserve Bank of India Tuesday showed.

This deficit was 0.5% of the gross domestic product in the April-June period against 0.4% earlier.

The overall balance of payments for the quarter were also at a deficit of $8.1 billion.


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Merchandise trade deficit was at $86.1 billion, up from $68.9 billion seen in the year-ago quarter. This was primarily due to a 26% higher oil import bill to $49 billion in the first quarter of FY27 even as the oil import volumes contracted 18%.

Net services receipts grew to $51.6 billion from $47.9 billion a year ago, backed by higher exports in computer services, other business services and transportation services, RBI said.

In the financial account, foreign direct investment recorded a net inflow of $6.1 billion, up from $5.2 billion seen in the same period last year. Foreign portfolio investment however recorded a net outflow of $9.6 billion as against a net inflow of $1.6 billion making the capital account slip into deficit. Non-resident deposits saw a net inflow of $2.8 billion as compared with $3.6 billion earlier. Net inflows under external commercial borrowings amounted to $3.3 billion, down from $4.4 billion seen in the same period last year.

The central bank revised the current account deficit figure to $4.2 billion from $3.1 billion as per earlier estimates announced last month. The capital account deficit figure was also revised to $5.5 billion from the $5 billion. After adjusting the error and omission of $1.6 billion, the current account came at $3.9 billion.

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

The country's foreign exchange reserves decreased by $8.1 billion in the first quarter on a balance of payments basis which does not include the change in valuation of the forex kitty. Foreign exchange reserves in nominal terms however decreased more -- $22.5 billion during April-June 2026, RBI said.