MUMBAI: The country’s balance of payments turned positive with the current account balance recording a huge surplus of $13.5 billion (1.3% of GDP) in Q4 FY25 compared to $4.6 billion (0.5% of GDP) in Q4 FY24 and as against a deficit of $11.3 billion (1.1% of GDP) in Q3FY25, show the latest data from the central bank.
For the full fiscal year of 2025, the current account remained in deficit at $23.3 billion (0.6% of GDP), lower than $26 billion (0.7% of GDP) in FY24, primarily due to higher net invisibles receipts.
On the other hand, the central bank said the nation’s external debt rose by $67.5 billion to $736.3 billion in March 2025, which translates in terms of external debt to GDP ratio rose 19.1% from 18.5% in March 2024.
The huge surplus is primarily because of the falling imports during the quarter and stable but low crude prices. And the surplus is almost double of analysts’ estimate of $7 billion.
According to the balance of payments (BoP) data released by the Reserve Bank on Friday, the current account turned in a surplus of $13.5 billion during the March quarter of last fiscal, as the merchandise trade deficit was only $59.5 billion in Q4 on the back of falling imports. In the same period of FY24, the trade deficit was only $52 billion and $79.3 billion in Q3 FY25.
Net services receipts increased to $53.3 billion in Q4 from $42.7 billion a year ago. Services exports have risen on an annual basis in major categories such as business services and computer services, the central bank said.
Net outgo on the primary income account, primarily reflecting payments of investment income, moderated to $11.9 billion in Q4 from $14.8 billion on-year.
Personal transfer receipts, mainly representing remittances from overseas, rose to $33.9 billion from $31.3 billion.
In the financial account, net foreign direct investment fell to a low $0.4 billion from $2.3 billion, while foreign portfolio investment saw a net outflow of $5.9 billion as against a net inflow of $11.4 billion. Net inflows under external commercial borrowings more than doubled to $7.4 billion from $2.6 billion.
Non-resident deposits saw a net inflow of $2.8 billion, lower than US$ 5.4 billion a year ago.
The quarter also saw an accretion of $8.8 billion to the foreign exchange reserves (on a BoP basis) in Q4 compared to an accretion of $30.8 billion in Q4 FY24. There was a depletion of $5 billion in the foreign exchange reserves (on a BoP basis) in FY25.
Meanwhile, the central bank also said the nation’s external debt rose by $67.5 billion to $736.3 billion in March 2025 which translates in terms of external debt to GDP ratio rose 19.1% from 18.5% in March 2024.The external debt is marginally higher than the forex reserves which declined by $1.1 billion to $697.93 billion for the week to June 20, the Reserve Bank said Friday. The reserves had peaked at $704.8 billion in September 2024.
The RBI said the spike in external debt was primarily due to the valuation effect following the appreciation of the dollar against the rupee and other currencies which amounted to $5.3 billion. Excluding the valuation effect, external debt would have increased by $72.9 billion instead of $67.5 billion.
Of this long-term debt (with original maturity of above one year) was $601.9 billion, an increase of $60.6 billion over its level at end-March 2024 while the short-term debt (with original maturity of up to one year) in total external debt declined to 18.3% from 19.1% in March 2024. However, the ratio of short-term debt to foreign exchange reserves increased to 20.1% from 19.7%.
Dollar-denominated debt remained the largest component of the external debt, with a share of 54.2%, followed by those denominated in the rupee (31.1%), yen (6.2%), SDR (4.6%), and the euro (3.2%).
Loans remained the largest component of external debt, with a share of 34%, followed by currency and deposits (22.8%), trade credit and advances (17.8%) and debt securities (17.7%).
Source: The New Indian Express
