India's current account deficit widened to $4.2 billion in April-June 2026
Where it stands
On 1 September 2026 the Reserve Bank of India (RBI) released India's balance of payments for April-June 2026. The current account deficit was $4.2 billion, or 0.5 per cent of GDP. The deficit was $3.4 billion a year earlier. The merchandise trade deficit rose to $86.1 billion from $68.9 billion. Oil imports rose to $60.6 billion from $49.2 billion. Net services receipts rose to $51.6 billion. Remittances rose to $42.9 billion. Foreign portfolio investors took out a net $9.6 billion. The overall balance of payments was a deficit of $8.1 billion. Foreign exchange reserves fell by the same $8.1 billion. Reserves had risen by $4.5 billion a year earlier.
Background
The balance of payments records all money flows between India and other countries. The current account covers goods, services, investment income and remittances. India imports more goods than India exports. Services exports and remittances cover part of that gap. The rest is the current account deficit. The capital and financial account records investment flows and loans. Foreign exchange reserves rise or fall to balance the two accounts. The RBI publishes these numbers about two months after each quarter ends. The current account showed a surplus of $7.1 billion in January-March 2026. The full-year deficit for 2025-26 was $25.2 billion, or 0.6 per cent of GDP.
How it developed
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April to June 2026How it started
The current account was in surplus in January-March 2026
The RBI publishes India's balance of payments every quarter. The previous release came on 8 June 2026. The current account showed a surplus of $7.1 billion in January-March 2026. The surplus was 0.7 per cent of GDP. For the full year 2025-26 the deficit was $25.2 billion, or 0.6 per cent of GDP. Foreign portfolio investors took out a net $16.4 billion in 2025-26. A war in West Asia began on 28 February 2026. Crude oil rose from about $70 to about $122 a barrel within a month. April-June 2026 was the first full quarter after the war began.
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1 September 2026New fact
RBI: current account deficit $4.2 billion, trade gap $86.1 billion
The RBI released the April-June 2026 balance of payments on 1 September 2026. The current account deficit was $4.2 billion, or 0.5 per cent of GDP. The merchandise trade deficit rose to $86.1 billion from $68.9 billion a year earlier. Oil imports alone rose to $60.6 billion from $49.2 billion. Net services receipts rose to $51.6 billion from $47.9 billion, led by computer, business and transport services. Remittances rose to $42.9 billion from $33.2 billion.
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1 September 2026New fact
Portfolio outflows pulled reserves down by $8.1 billion
Foreign portfolio investors took out a net $9.6 billion in April-June 2026. FPIs had brought in a net $1.6 billion a year earlier. Foreign direct investment rose to a net $6.1 billion from $5.2 billion. External commercial borrowings brought in a net $3.3 billion, down from $4.4 billion. Foreign exchange reserves fell by $8.1 billion on a balance of payments basis. Reserves fell by $22.5 billion in total after a valuation loss of $14.4 billion on gold and currencies.
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1 September 2026Settled
Economists expect the deficit to widen later in 2026-27
Business Standard quoted Icra chief economist Aditi Nayar on 1 September 2026. Nayar said the deficit widened due to the surge in commodity prices. Nayar said capital left India for the third quarter in a row. Icra expects the deficit to widen in the next two quarters. Icra expects the full-year deficit for 2026-27 at around 0.9 per cent of GDP. The RBI calls the April-June numbers preliminary, open to revision in later releases.
Why it matters for UPSC
For GS3, remember that the balance of payments has two sides. The current account covers goods, services, income and transfers. The capital and financial account covers investment and loans. A current account deficit is not the same as a balance of payments deficit. In April-June 2026 the current account deficit was $4.2 billion. The balance of payments deficit was $8.1 billion. Portfolio outflows made the second number bigger than the first. A balance of payments deficit means reserves fell.
Key terms
Sources (7)
- Reserve Bank of India · official · Developments in India's Balance of Payments during the Fourth Quarter (January-March) of 2025-262 Sep, 12:10 pm
- Al Jazeera · How a 95 percent drop in Hormuz traffic changed global shipping (27 August 2026)2 Sep, 12:10 pm
- Press Information Bureau · official · Government Slashes Excise Duty on Petrol and Diesel to Shield Consumers and OMCs from Global Oil Shock (27 March 2026)2 Sep, 12:10 pm
- Reserve Bank of India · official · Developments in India's Balance of Payments during the First Quarter (April-June) of 2026-272 Sep, 12:10 pm
- Business Standard · India's current account deficit widens to $4.2 bn in Q1 as trade gap grows2 Sep, 12:10 pm
- PTI · India's Current Account Deficit Widens To USD 4.2 Billion In Q1 FY27: RBI Data (Free Press Journal copy)2 Sep, 12:10 pm
- ANI · India's current account deficit widens to USD 4.2 billion in Q1 FY27 as merchandise trade gap rises: RBI2 Sep, 12:10 pm