New Delhi [India], September 1 (ANI): India's current account deficit widened to USD 4.2 billion, or 0.5 per cent of GDP, in the April-June quarter of the current financial year, as the country's merchandise trade deficit increased sharply, according to preliminary data released by the Reserve Bank of India (RBI) on Tuesday.

'India's current account deficit stood at US$ 4.2 billion (0.5 per cent of GDP) in Q1:2026-27 as compared to US$ 3.4 billion (0.4 per cent of GDP) in Q1:2025-26,' the RBI said in its release on developments in India's balance of payments.

The merchandise trade deficit widened to USD 86.1 billion during the quarter from USD 68.9 billion in the corresponding period last year.

Higher earnings from services provided some support to the current account. Net services receipts increased to USD 51.6 billion from USD 47.9 billion a year ago.

'Services exports have risen on a year-on-year basis in major categories such as computer services, other business services and transportation services,' the RBI said.

Remittances from Indians employed overseas also increased during the quarter. Personal transfer receipts rose to USD 42.9 billion from USD 33.2 billion in the year-ago period. At the same time, the net outgo on the primary income account, mainly reflecting investment income payments, declined to USD 10.5 billion from USD 13.3 billion.

On investment flows, foreign direct investment recorded a net inflow of USD 6.1 billion in Q1 FY27, compared with USD 5.2 billion a year earlier.

Foreign portfolio investment, however, recorded a net outflow of USD 9.6 billion during the quarter, against a net inflow of USD 1.6 billion in Q1 FY26.

Net inflows into NRI deposits stood at USD 2.8 billion, lower than USD 3.6 billion a year ago, while net inflows through external commercial borrowings declined to USD 3.3 billion from USD 4.4 billion.

'Foreign exchange reserves depleted by US$ 8.1 billion (on a BoP basis) in Q1:2026-27 as against an accretion of US$ 4.5 billion in Q1:2025-26,' the RBI said. (ANI)