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LoansJagat Team
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4 Min
28 Jun 2025
India has scripted a less expected win, posting a Current Account Surplus (CAS) of $13.5 billion in the January–March 2025 quarter (Q4FY25), as per the latest Reserve Bank of India (RBI) data.
This marks the first surplus since Q4 of FY21, representing 1.6% of GDP for the quarter. The surplus was driven by a sharp narrowing of the merchandise trade deficit and a rise in services exports.
The RBI press release, dated June 27, 2025, answers the Who, What, When, Where, Why, and How:
According to the RBI, the $13.5 billion surplus compares to a current account deficit (CAD) of $1.3 billion in Q3FY25 and $1.3 billion deficit in Q4FY24.
Quarterly Current Account Position (FY24 vs FY25)
Quarter | Current Account ($ Billion) | As % of GDP |
Q4 FY24 | -1.3 | -0.2% |
Q1 FY25 | -9.2 | -1.1% |
Q2 FY25 | -8.3 | -1.0% |
Q3 FY25 | -1.3 | -0.2% |
Q4 FY25 | +13.5 | +1.6% |
Key Highlights:
The merchandise trade deficit continues to be India’s biggest current account challenge. However, in Q4FY25, it shrunk due to moderation in gold imports and steady crude oil prices.
Trade and Services Balance (Q4FY25 vs Q4FY24)
Component | Q4 FY24 ($ Bn) | Q4 FY25 ($ Bn) | Change |
Merchandise Exports | 106.9 | 111.2 | +4.0% |
Merchandise Imports | 159.4 | 162.1 | +1.7% |
Trade Deficit | -52.6 | -50.9 | Narrowed |
Net Services Exports | 39.1 | 44.5 | +13.8% |
Notably, net services receipts were $44.5 billion, led by:
This uplift in the service sector acted as a crucial cushion to India’s trade imbalance.
India’s capital account witnessed steady net inflows due to Foreign Direct Investment (FDI) and Foreign Portfolio Investment (FPI) turning positive.
Capital Account Trends – Q4FY25
Component | Q4 FY25 ($ Bn) |
Net FDI | 9.8 |
Net FPI | 6.3 |
Loans (External Commercial Borrowings + NRI Deposits) | 4.7 |
Banking Capital | -1.6 |
Other Capital | 3.9 |
Total Capital Account | +23.1 |
Despite global volatility, India continues to be seen as an attractive destination for investment, particularly in the tech and clean energy sectors.
Full-Year FY25 Review: Current Account Deficit Narrows to 0.7%
Though Q4 ended in surplus, the full fiscal year FY25 posted a current account deficit of $23.2 billion (0.7% of GDP), significantly lower than FY24’s deficit of $67 billion (2% of GDP).
Fiscal Year | CAD ($ Billion) | As % of GDP |
FY22 | -38.7 | -1.2% |
FY23 | -67.0 | -2.0% |
FY24 | -50.4 | -1.5% |
FY25 | -23.2 | -0.7% |
The reduction in CAD is largely attributed to:
While Q4FY25’s surplus is a positive surprise, economists urge caution. The surplus was partly driven by seasonal factors, and structural imbalances in trade remain.
Key Factors to Watch:
The government and RBI will likely focus on:
India’s $13.5 billion current account surplus in Q4FY25 reflects the country’s resilience in external trade and financial flows. However, sustaining this surplus will require strategic economic policy, supply-side support, and diversified export markets.
While this performance strengthens India's macroeconomic fundamentals, policymakers will have to ensure that the surplus is not just a quarterly blip but a stepping stone toward long-term external stability.
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