India’s Current Account Gap Beats Forecasts as Remittances Surge

97f}0f79slz)glj9q417(b[u_media_dl_1.png Source: RBI

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India’s current account fared better than expected in the year ended March, with the deficit staying flat as strong services receipts and higher remittances offset disruptions caused by the Iran war.

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The shortfall in the broadest measure of trade in goods and services stood at $25.2 billion, or 0.6% of GDP, in fiscal 2026, according to Reserve Bank of India data released Monday. That’s the same level as in 2024-25, but below economists’ expectation of a gap of 0.9%.

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The full-year reading surpassed forecasts on a surprise surplus of $7.1 billion, or 0.7% of GDP, in the January-March quarter compared with an expectation of a mild deficit. In the same period a year earlier, the country had recorded a surplus of $13.7 billion, or 1.4% of GDP.

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“While the current account surplus partly reflected the seasonal fourth quarter trade boost and softer oil imports in March, the real surprise came from remittances, which rose sharply quarter-on-quarter,” said Madhavi Arora, economist with Emkay Global Services Ltd. “This helped dispel fears that the Middle East crisis would materially weigh on remittance inflows.”

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Services receipts increased to $60.4 billion in the fourth quarter from $53.3 billion a year earlier, while remittances by Indians employed overseas rose to $43.5 billion from $33.9 billion. 

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The current account deficit may “more-than-double” in the ongoing fiscal year “owing to the surge in global energy prices following the West Asia conflict,” said Rahul Agrawal, economist at ICRA Ltd. The recent measures to attract capital flows by the government and the RBI should provide some respite, but “these may remain insufficient unless net FDI inflows improve materially from the current levels,” Agrawal said.  

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Here’s more from the data:

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