India’s CAD widens to $4.2 billion in Q1FY27
India's current account deficit widened to $4.2 billion in the first quarter of fiscal year 2026-27, driven by a significant increase in the merchandise trade gap. Despite this, strong services exports and record-high remittances provided a buffer against further economic strain.
Why it matters
This data provides critical insight into India's macroeconomic health and balance of payments, which influences investor confidence and national fiscal policy.
India’s current account deficit (CAD) widened to $4.2 billion, or 0.5% of GDP, in the first quarter of 2026-27, compared with $3.4 billion, or 0.4% of GDP, in the year-ago period, according to preliminary data released by the Reserve Bank of India (RBI) on Tuesday.
The widening deficit was primarily driven by a higher merchandise trade gap, which increased to $86.1 billion in Q1 FY27 from $68.9 billion in the corresponding quarter of 2025-26.
However, stronger services earnings and higher remittance receipts provided some cushion. Net services receipts rose to $51.6 billion during the quarter from $47.9 billion a year earlier. Services exports recorded year-on-year growth across major segments, including computer services, other business services and transportation services.
The net outgo under the primary income account declined to $10.5 billion in Q1 FY27 from $13.3 billion in the year-ago quarter, mainly reflecting lower investment income payments, the RBI said.
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