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Current Account Deficit Narrows to 1.3% of GDP in Q2 FY26

2 December 20251 min read
ECONOMYCurrent AccountDeficit Narrows to1.3% of GDP in Q2FY262 December 2025safalsetu.com

Why in the news

RBI data showed a narrower gap in July-September 2025.

Key facts

PeriodCAD (US$ billion)% of GDP
July-September 202512.31.3
July-September 202420.82.2

About CAD

The country spends more on external dealings than it earns, over a given period. The current account has three parts:

  • Trade balance: exports less imports of goods and services.
  • Primary income: investment earnings, wages and dividends from abroad net of payments to foreign investors.
  • Secondary income: remittances, foreign aid and other one-way transfers.

Significance

  • Moderate CAD: healthy investment inflows; high CAD: heavy foreign capital reliance and currency risk.

Exam angle

  • Remittances are secondary income.

Test yourself

1. What was India's CAD in July-September 2025 as per RBI data?

The notes record CAD at $12.3 billion, or 1.3% of GDP, in Q2 FY26.

2. Under the current account, remittances from workers abroad are counted as which component?

Remittances, aid and other unilateral transfers form secondary income (net transfers).

3. India's CAD in the year-ago quarter (July-September 2024) stood at what share of GDP?

The earlier quarter showed $20.8 billion, equal to 2.2% of GDP.

This topic is part of Daily Current Affairs 2 December 2025 (14 topics).

All topics of the dayDay quizDecember 2025

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