On June 27, 2025, the Reserve Bank of India (RBI) released data on ‘India’s Balance of Payments for Q4 (January–March) FY25’, showing that India’s current account balance posted a surplus of USD 13.5 billion (1.3% of Gross Domestic Product, GDP) in the fourth quarter (Q4) of Financial Year 2024–25 (FY25).
- This surplus was higher compared to USD 4.6 billion (0.5% of GDP) in Q4 FY24, and a significant improvement from a deficit of USD 11.3 billion (1.1% of GDP) in Q3 FY25.
Key Highlights:
Quarterly (Q4 FY25) Performance:
i.Merchandise Trade Deficit: Moderated to USD 59.5 billion from USD 79.3 billion in Q3 FY25, though higher than USD 52 billion in Q4 FY24.
ii.Net Services Receipts: Increased to USD 53.3 billion, from USD 42.7 billion in Q4 FY24.
iii.Remittances (Personal Transfers): Rose to USD 33.9 billion, up from USD 31.3 billion in Q4 FY24.
iv.Primary Income Outgo: Net payments moderated to USD 11.9 billion, from USD 14.8 billion in Q4 FY24.
v.Personal transfer receipts: Increased to USD 33.9 billion in Q4 FY25, up from USD 31.3 billion in the same quarter of FY24.
vi.Foreign Direct Investment (FDI):Â Recorded a net inflow of USD 0.4 billion in Q4FY25, lower than USD 2.3 billion in Q4 FY24.
vii.Foreign Portfolio Investment (FPI): Saw a net outflow of USD 5.9 billion, compared to a net inflow of USD 11.4 billion in Q4 FY24.
viii.External Commercial Borrowings (ECBs): Recorded a net inflow of USD 7.4 billion, higher than USD 2.6 billion in Q4 FY24.
ix.Non-Resident Indian (NRI) deposits: Saw net inflows of USD 2.8 billion, down from USD 5.4 billion in Q4 FY24.
Annual FY25Â Performance:
i.Current Account Deficit (CAD): Narrowed to USD 23.3 billion (0.6% of GDP) from USD 26 billion (0.7% of GDP) in FY24, aided by higher net invisible receipts (services and remittances).
- For FY26, the CAD is expected to average 1% of GDP, assuming crude oil prices stabilize at USD 70/barrel.
ii.Foreign Investment Inflows:
- FDI: Fell sharply to USD 1 billion (from USD 10.2 billion in FY24)
- FPI: Net inflow plummeted to USD 3.6 billion (from USD 44.1 billion in FY24)
iii.Foreign Exchange Reserves: Decreased by USD 5 billion in FY25 but saw an accretion of USD 8.8 billion in Q4 FY25.
Key Terms:
i.Current Account Deficit(CAD): A CAD occurs when the total value of goods and services a country imports exceeds the total value of goods and services it exports.
ii.Foreign Direct Investment (FDI): It is a long-term investment made by a company or individual from one country into a business in another country.
iii.Foreign Portfolio Investment (FPI): It involves foreign investors putting money into a country’s financial assets like stocks, bonds, and other securities without seeking direct control over the businesses.
iv.External Commercial Borrowings (ECB): Loans in foreign currency taken by Indian borrowers from foreign lenders.
Recent Related News:
In May 2025, the Ministry of Commerce & Industry(MoC&I) reported that India recorded provisional Foreign Direct Investment (FDI) inflows of USD 81.04 billion in the Financial Year 2024–25(FY25), marking a 14% rise compared to USD 71.28 billion received in FY24. FDI has steadily grown from USD 36.05 billion in FY14, reflecting strong investor confidence.
