India Records First Current Account Surplus in a Year, Growth Outlook Improves

Latest Update: June 28, 2025 | Author: Mobin Khan

India’s Economic Pulse Strengthens:

India has achieved a significant economic milestone, recording its first current account surplus in four quarters. This development reflects strong resilience in the country’s external sector, even amid a challenging global environment.

According to data released by the Reserve Bank of India (RBI), the current account registered a $13.5 billion surplus (1.3% of GDP) in the January–March 2025 quarter (Q4 FY25). This turnaround follows three consecutive quarters of deficits, marking a notable recovery in India’s economic stability.

Key Drivers Behind the Surplus

The surplus was largely driven by strong services exports — especially in the IT sector and business process management (BPM) — as well as a record-high $33.9 billion in remittances from Indians living abroad. These inflows provided critical support to the external account even as merchandise trade deficits remained elevated.

India’s merchandise trade deficit widened to $59.5 billion during the same quarter, but this was offset by robust earnings from the services sector and inward remittances.

Growth Outlook Brightens

Despite concerns over private investments and employment generation, several agencies have forecast continued momentum in India’s economic growth:

• Reuters Poll: Projects India’s GDP to grow at 6.4% in FY25–26 and 6.7% in FY26–27, supported by sustained government capital expenditure.
• S&P Global Ratings: Recently upgraded India’s FY26 GDP growth forecast to 6.5%, citing factors such as normal monsoon recovery, recent tax reliefs, falling oil prices, and expected monetary policy easing by the RBI.

Government Capex & Policy Support

The government’s continued push for infrastructure development and public sector investment is playing a vital role in sustaining growth. Capital expenditure has been a key pillar, helping bridge the investment gap created by private sector caution.

Policymakers are also optimistic that falling inflation, lower oil prices, and global demand recovery will improve private sector confidence in the coming quarters.

Challenges Ahead

While the numbers are encouraging, India’s economic journey still faces several challenges:

• Job creation and youth unemployment remain major concerns.
• Weak private sector investment may weigh down long-term growth potential.
• High interest rates and global uncertainty continue to impact consumer spending and exports.

Despite these headwinds, India’s overall macroeconomic indicators — including stable forex reserves, a manageable fiscal deficit, and strong external sector performance — provide a firm foundation for sustained economic momentum.

Conclusion

India’s return to a current account surplus and the positive growth forecasts reflect a resilient and adaptive economy. With supportive policies, robust remittances, and sustained export performance, India is well-positioned to maintain its trajectory as one of the world’s fastest-growing major economies in the years to come.

Tags: India Current Account Surplus 2025, India GDP Growth, RBI Report FY25, India Economy News, Economic Growth Forecast India