India's August current account deficit shrinks to $5.2 billion amid strong capital inflows

According to the Reserve Bank of India, India's current account deficit contracted to $5.2 billion in August, compared with $6.1 billion in the same month a year ago, as a smaller merchandise trade shortfall and stronger net services receipts offset a widening income account deficit. The balance of payments recorded a $45.4 billion surplus, a reversal from a $5.6 billion deficit a year earlier, largely due to a surge in banking capital inflows of $64.7 billion.

External commercial borrowings saw a net outflow of $22.4 billion in August, contrasting sharply with a modest outflow the previous year. Merchandise exports increased to $44.7 billion while imports grew to $71.3 billion, narrowing the trade deficit. Net services receipts and transfers also rose, contributing to the overall improvement.