India’s current account deficit (CAD was largely unchanged at $11.2 billion (1.2% of gross domestic product, or GDP) in the second quarter (Q2; July-September) of fiscal 2025 compared with $11.3 billion (1.3% of GDP) in the corresponding year-ago quarter. Sequentially, though, the metric, which reflects a country’s external payments position, widened slightly from $10.2 billion (1.1% of GDP) in the first quarter.

A key metric, CAD was $21.4 billion (1.2% of GDP) in the first half of fiscal 2025, as against $20.2 billion (1.2% of GDP) in the year-ago period.

Although CAD moderated and financial inflows increased, the rupee depreciated to 83.8/$ in the second quarter (Q2) of this fiscal versus 82.7/$ in Q2 of 2024.

The forex reserves have depleted since then, largely on account of the Reserve Bank of India (RBI)’s intervention in the forex market to curb volatility in the rupee. From $692.3 billion at the end of Q2, India’s forex reserves fell to $644.4 billion as of December 20, 2024.

Even as overall financial flows in Q2 fiscal 2025 increased, net foreign direct investment (FDI) saw outflows for the first time since Q2 fiscal 2024, and almost tripled to $2.2 billion, from $0.8 billion. Financial derivatives outflows also increased to $5.5 billion from outflows of $1.9 billion in the same quarter of the previous fiscal. On the other hand, net FPI inflows of $19.9 billion, the highest since Q3 fiscal 2021, were recorded.