India’s current account deficit (CAD) widened marginally to $3.1 billion in the April-June quarter of FY27 from $2.9 billion in the corresponding period a year ago, RBI data showed.
The deterioration was driven primarily by a wider merchandise trade deficit, which increased to $85.7 billion from $68.9 billion a year earlier. Merchandise imports surged to $218 billion from $181.6 billion, outpacing the rise in exports to $132.2 billion from $112.7 billion, as the rising cost of oil, gas and key agriculture inputs rose due to the West Asia crisis.
A stronger services surplus and higher transfer receipts helped contain the impact of the widening goods trade gap.
Net services receipts rose to $52.2 billion in April-June from $47.9 billion a year ago. Services exports increased to $106.7 billion from $97.4 billion, while imports climbed to $54.5 billion from $49.5 billion.
Net transfers, which largely include remittances, jumped to $41.4 billion from $30.9 billion.
“The preliminary first-quarter FY27 current account deficit, based on the RBI’s monthly balance of payments data, expectedly worsened sequentially to around $3.3 billion, or 0.3 percent of GDP, largely due to higher oil imports and lower services exports,” said Madhavi Arora, chief economist at Emkay Global.
“Encouragingly, net remittances remained strong at around $42 billion,” she added.
The capital account posted a deficit of $5 billion during the quarter, compared with a surplus of $7.4 billion a year earlier.
Net foreign direct investment rose to a nine-quarter high of $7.8 billion from $4.8 billion. Investment into India rose to $17.2 billion from $13.9 billion, while outward FDI was broadly steady at $9.4 billion.
The overall balance of payments slipped to a deficit of $8.1 billion, compared with a surplus of $4.5 billion in the corresponding quarter last year.
Arora lowered her FY27 current account deficit forecast to 1.3 percent of GDP, assuming an average Brent crude oil price of $85 a barrel. The earlier estimate was 1.7 percent, based on oil averaging $90 a barrel.
Oil and gold import values are expected to rise meaningfully during FY27 despite lower volumes, she said. Higher semiconductor prices also pose an upside risk to electronics imports and the overall import bill.
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