India's Current Account Surplus (Indian Economy)
India's Current Account Surplus (Indian Economy)
Why In News:
India recorded a current account surplus of $7.1 billion in Q4 FY26 (January–March 2026), narrowing from previous quarters.
Balance of Payments (BoP)
Current Account: Covers trade in goods (merchandise), trade in services, primary income (remittances, dividends), and secondary income.
Capital Account: Capital transfers and acquisition/disposal of non-produced assets. Small in India.
Financial Account: FDI, FPI (Foreign Portfolio Investment), External Commercial Borrowings (ECBs), banking capital flows.
BoP Identity: Current Account + Capital Account + Financial Account = Change in Foreign Exchange Reserves.
India's Current Account- Historical Context
India typically runs a Current Account Deficit (CAD)- imports more goods than it exports.
Services Surplus: India earns ~$150 billion annually from software, IT, and BPO exports- partially offsetting goods deficit.
Remittances: India is the world's largest recipient of remittances (~$120 billion in FY25). Gulf, USA, UK are main sources.
Surplus Drivers (Q4 FY26): Likely driven by higher services exports, stable remittances, and moderation in crude oil import bill.
Key Facts for Prelims
RBI publishes India's BoP data on a quarterly basis.
FEMA (Foreign Exchange Management Act), 1999: Governs all forex transactions in India. RBI is the regulator. Replaced FERA (1973).
India's Forex Reserves: ~$690 billion (as of early 2026). 4th largest globally. Sufficient for ~11 months of imports.