India's April-June balance of payments records $8.1 billion deficit, June turns surplus

India's April-June balance of payments deficit reached $8.1 billion, according to central bank data released on Friday. This represents a significant shift from the surplus of $4.5 billion recorded in the same period a year earlier. Despite this deficit, the June quarter marked a turnaround, with the overall balance of payments surplus reaching $2.9 billion. The previous year, India had reported a BoP deficit of $6.6 billion in April and $4.4 billion in May.

In June, the current account balance turned into a deficit of $6.2 billion, compared to a surplus of $1.2 billion in the same month last year. The deficit in the current account narrowed to $3.1 billion in the quarter to June, down from $2.9 billion in the previous year. Net transfers, including remittances from Indian workers overseas, increased to $11.9 billion in June from $10.9 billion a year ago.

On the capital account, foreign portfolio investments flowed in at $9.1 billion in June, marking a stark contrast to the outflow of $1.6 billion in the same month last year. The worries over India's BoP deficit have been a major concern for the rupee, especially as the Iran war led to a sharp rise in crude oil prices, causing continuous capital outflows.

Despite these concerns, policymakers have implemented measures to boost dollar inflows. Analysts now predict a near-neutral or modest BoP surplus for the fiscal year ending March 2027.