How Did India Achieve a Current Account Surplus of $13.5 Billion in the Jan-March Quarter?
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Synopsis
India has marked a significant achievement by recording a current account surplus of $13.5 billion for the January-March quarter of the financial year 2024-25. This remarkable turnaround from a prior deficit reflects improved services exports and remittances, showcasing India's economic resilience amidst global challenges.
Key Takeaways
- India's current account surplus for Q4 2024-25 was $13.5 billion.
- The surplus represents 1.3 percent of GDP.
- It marks a significant turnaround from a deficit of $11.3 billion in the previous quarter.
- Net services receipts increased to $53.3 billion.
- Personal transfers rose to $33.9 billion.
Mumbai, June 27 (NationPress) India has achieved a current account surplus of $13.5 billion, which is 1.3 percent of its GDP, during the fourth quarter of the financial year 2024-25 (January–March), as per the latest data from the Reserve Bank of India (RBI)
This impressive achievement has turned around the previous current account deficit of $11.3 billion (1.1 percent of GDP) recorded in the preceding quarter (October-December) of 2024-25. Furthermore, it signifies a more than two-fold increase compared to a surplus of $4.6 billion (0.5 percent of GDP) from the same quarter last year.
For the entire year of 2024-25, India's current account deficit stood at $23.3 billion (0.6 percent of GDP), which is an improvement over $26 billion (0.7 percent of GDP) during 2023-24, primarily owing to increased net invisibles receipts, the RBI indicated.
During 2024-25, net invisibles receipts surged due to enhanced services and personal transfers.
Despite a decrease in merchandise exports, the surplus in Q4 (January-March) was propelled by robust services exports and a reduced net outflow in the primary income account, according to RBI data.
Net services receipts climbed to $53.3 billion in Q4 2024-25, compared to $42.7 billion in the same quarter last year. The growth in services exports was observed year-on-year across major categories, including business services and computer services, as reported by the RBI.
The net outflow on the primary income account, which mainly reflects investment income payments, decreased to $11.9 billion in Q4: 2024-25, down from $14.8 billion in the same quarter of 2023-24.
Personal transfer receipts, primarily consisting of remittances from Indians working abroad, increased to $33.9 billion in the January-March quarter of 2024-25, rising from $31.3 billion in the same quarter last year.
In the financial account, foreign direct investment (FDI) saw a net inflow of $0.4 billion in the January-March period, compared to an inflow of $2.3 billion in the same timeframe of 2023-24.
On the other hand, foreign portfolio investment (FPI) recorded a net outflow of $5.9 billion in Q4, contrasting with a net inflow of $11.4 billion in the same quarter of the previous year.
Net inflows from external commercial borrowings (ECBs) to India reached $7.4 billion in Q4 2024-25, compared to $2.6 billion in the same period last year, as per the RBI statement.
Non-resident deposits (NRI deposits) saw a net inflow of $2.8 billion in Q4 2024-25, which is lower than $5.4 billion a year ago.
During Q4 2024-25, there was an increase of $8.8 billion in foreign exchange reserves (on a BoP basis), compared to an increase of $30.8 billion in the same quarter of 2023-24.
For the full year of 2024-25, the net inflow under FDI stood at $1.0 billion, lower than $10.2 billion in 2023-24. Meanwhile, FPI recorded a net inflow of $3.6 billion during the year, down from $44.1 billion the previous year, as stated by the RBI.
Point of View
I believe this current account surplus is a testament to India's growing economic strength and resilience. The impressive service exports and remittance inflows indicate a positive trajectory for our economy, positioning us well in the global market. It's crucial that we continue to build on this momentum to ensure sustainable growth.
NationPress
27/06/2025
Frequently Asked Questions
What is a current account surplus?
A current account surplus occurs when a country's total exports of goods, services, and transfers exceed its total imports. It indicates a net inflow of foreign currency.
What factors contributed to India's current account surplus?
India's current account surplus was mainly driven by strong services exports and increased personal transfer receipts, particularly remittances from overseas Indians.
How does a current account surplus affect the economy?
A current account surplus can strengthen a country's currency, improve foreign exchange reserves, and reflect economic stability and growth.
What was India's current account deficit in the previous year?
In the financial year 2023-24, India recorded a current account deficit of $26 billion.
How do services exports impact the current account?
Services exports contribute positively to the current account by generating foreign exchange inflows, thus enhancing the surplus or reducing the deficit.
