India Records USD 2 Billion Current Account Deficit in May 2026 as Trade Gap Expands: RBI

India reported a current account deficit (CAD) of USD 2 billion in May 2026, primarily due to a sharp increase in the merchandise trade deficit, according to preliminary Balance of Payments data released by the Reserve Bank of India. Strong services earnings and transfer receipts partly offset the impact of the wider goods trade gap.

The merchandise trade deficit increased to USD 27.9 billion during May 2026, compared with USD 22.6 billion in May 2025. Merchandise exports grew to USD 46.1 billion from USD 38.7 billion, while imports rose more significantly to USD 74 billion from USD 61.3 billion during the same period.

Net services receipts stood at USD 15.7 billion, remaining broadly stable compared with USD 15.8 billion recorded a year earlier. Net transfer receipts increased to USD 13.6 billion from USD 10.5 billion. Meanwhile, net income outflows rose to USD 3.4 billion, against USD 3 billion in May 2025.

Despite the monthly deficit, India registered a current account surplus of USD 2.8 billion during April–May 2026. This marked an improvement from the USD 4.1 billion deficit reported in the corresponding two-month period of the previous year.

During April–May 2026, the cumulative merchandise trade deficit expanded to USD 55.9 billion. However, net services receipts increased to USD 34.3 billion, while net transfers reached USD 29.6 billion, supporting the current account position.

Capital account data indicated net outflows of USD 2.4 billion in May 2026. Net foreign direct investment was negative at USD 0.1 billion, while foreign portfolio investors recorded net withdrawals of USD 4.7 billion. Net short-term credit remained positive at USD 3.2 billion.

India’s overall Balance of Payments recorded a deficit of USD 4.4 billion in May 2026, reversing the USD 4.4 billion surplus registered in May 2025. For April–May 2026, the overall BoP deficit stood at USD 11 billion, compared with a surplus of USD 5 billion during the corresponding period of the previous year. CA Sansaar