India’s August current account deficit narrows as overseas inflows lift balance of payments

India’s current account deficit narrowed to $5.2 billion in August 2026 from $6.1 billion a year earlier, the Reserve Bank of India said in preliminary figures released on October 15. A sharp increase in overseas inflows helped move the country’s overall balance of payments to a $45.4 billion surplus, compared with a $5.6 billion deficit in August 2025.

The two measures describe different parts of India’s transactions with the rest of the world. The current account remained in deficit during August, while the overall balance of payments recorded a surplus as capital inflows outweighed that shortfall. The Times of India also reported the contrast between the narrower current account deficit and the much larger overall surplus.

Trade and services in August

India’s merchandise trade deficit was $26.6 billion, down from $27.6 billion in August 2025. Its services surplus rose to $16.5 billion from $15.6 billion over the same period. Those year-on-year changes accompanied the smaller monthly current account deficit; the figures still show that the merchandise deficit exceeded the services surplus.

Overseas deposits and investment inflows

The largest change in the RBI’s August figures was in banking capital. Net banking capital reached $64.7 billion, against an outflow of $4.7 billion a year earlier. Within the overseas-inflow picture, net deposits by non-resident Indians reached $83 billion, compared with $1 billion in August 2025. The scale of those deposit inflows helps explain why the overall payments balance changed far more than the current account deficit did.

Other investment flows also improved. Net foreign direct investment inflows were $3.3 billion, reversing a net outflow of $0.1 billion in August 2025. Net foreign portfolio investment inflows were $1.7 billion, against net outflows of $2.6 billion a year earlier. These figures distinguish the broader rise in capital inflows from the particularly large movement in non-resident deposits.

April–August figures show a wider current account deficit

The monthly improvement does not extend to the full April–August period. India’s current account deficit for those five months was $18.3 billion, compared with $12.8 billion in the corresponding period of 2025. Its overall balance of payments nevertheless showed a $58 billion surplus for April–August 2026, reversing a $0.8 billion deficit a year earlier. The RBI marked the August data as preliminary and said components may differ from totals because of rounding.