What the country earns abroad, and what it owes.

The current account adds up everything India earns from the world in a quarter (exports of goods and services, income on Indian money invested abroad, money sent home) and takes away everything it pays out. A deficit means the country spent more abroad than it earned, and paid the difference with foreign money that came in: investment, loans, or deposits by Indians living abroad.

A deficit is not a loss, any more than a family taking a home loan is losing money. What matters is its size against the economy, and whether the money that fills it stays.

Dividing by GDP lets one year be compared with another fifty years apart. A deficit beyond about 3% of GDP is often treated as hard to finance for long; it is a rule of thumb, not a law. The years that crossed it were years of trouble: the run-up to the 1991 payments crisis, and 2011-12 and 2012-13, when the rupee fell sharply.

India buys far more goods than it sells: crude oil, gold, electronics, machinery. That gap is the blue line, always below zero. Two flows climb against it. Services, led by software and business services, earn a growing surplus. Remittances, the money Indians working in the Gulf, America and elsewhere send to their families, add almost as much again. Income runs the other way: profits and interest paid to foreigners who invested in India exceed what Indian money earns abroad.

When the phone in your pocket, the petrol in your scooter and the gold at a wedding are paid for, it is largely a nurse in Dubai and a coder in Pune who pay.

For four decades the numbers are small enough to look flat at this scale; the economy was closed and the rupee controlled. The lines fan out after the 1991 reforms. The goods deficit widens as Indians buy more of the world's oil, gold and electronics, and invisibles, mostly software and remittances, rise almost as fast. The current account, their sum, stays close to zero because the two move together.

This is money that arrives without anything being sold for it: wages earned by Indians abroad and sent to their families, gifts, donations to temples and charities, and money NRIs draw out of their Indian bank accounts to spend here. For a household in Kerala, Punjab or Bihar it pays for school fees, a house, a wedding. For the country it is the steadiest inflow there is: it rarely falls even when markets panic.

The headline remittance figure mixes two different things. Money sent home by a worker abroad is income for a family. Money an NRI withdraws in India from a deposit already held here is a transfer of savings. Both count as private transfers. The bar on top is the first kind.

Any resident Indian may send up to US$ 250,000 a year abroad under the scheme: for a holiday, a child's college fees, support for a relative, shares in a foreign company. Travel here includes tour packages and spending on international cards. Much of it now carries tax collected at source, which is one reason the scheme's figures are watched closely.

Direct investment buys a lasting stake: a factory, a share of a company large enough to have a say in it. It is hard to pull out quickly. Portfolio investment buys shares and bonds that can be sold in a day, and it leaves when interest rates rise abroad or markets turn nervous. A deficit financed by portfolio money is a deficit financed by money that may not stay.

Headlines about "record FDI" usually quote the gross inflow. But private equity funds that bought into Indian companies sell out and take their money home, and Indian companies buy businesses abroad. What is left for the balance of payments is much smaller than the gross figure.

Each bar is a month of buying (above zero) or selling (below). When foreign funds sell, the stock market usually falls and the rupee weakens as they convert their rupees back into dollars. This is the money most likely to leave when the world gets nervous.

Reserves are dollars, euros, yen, gold and claims on the IMF held by the RBI. They exist for bad days: to pay for imports if foreign money stops coming, and to stop the rupee falling too fast. Each week's figure moves for two reasons. The RBI buys or sells dollars in the market. And everything it holds that is not a dollar (gold, euros, yen, the bonds themselves) is valued in dollars at that week's prices, so a fall in the euro or in gold shrinks the pile without the RBI selling anything.

Where a dot sits on its bar, the month's change was the RBI's own trading. Where they part, something else moved the pile: gold and other currencies revalued against the dollar, interest earned on the bonds held, forward contracts maturing. The RBI's purchase figures are published a few weeks after the reserves, so the latest months have bars but no dots.

A higher number is a weaker rupee. Over long periods the rupee loses ground because prices in India rise faster than in America: if Indian prices rise 5% a year and American prices 2%, a rupee that did not weaken would make Indian goods dearer abroad every year. The steps in the line are the moments when that slow pressure met a sudden one, such as 2008, 2013, 2018 and 2022.

For a family, a weaker rupee means dearer petrol, phones, foreign tuition and holidays; for an exporter, or a family receiving money from abroad, more rupees for every dollar earned.

India does not trade only with America. The nominal index (NEER) weighs the rupee against 40 currencies by how much India trades with each country. The real index (REER) then adjusts for prices: if the rupee falls 5% but Indian prices rise 5% more than partners' prices, Indian goods are no cheaper abroad, and the real rate has not moved. That is why the real rate, not the dollar rate, tells you whether Indian goods are getting more or less competitive.

Read the gap between the two lines: the nominal index falls steadily because Indian inflation runs higher than its partners'; the real index falls much less because that fall roughly offsets the price gap.

The rupee floats, but not freely. When it falls too fast, the RBI sells dollars from the reserves; when money floods in, it buys. A forward sale is a promise to deliver dollars at a future date: it supports the rupee today without spending reserves today, but the bill falls due. A deep negative forward book is reserves already spoken for.

External debt is what Indian residents owe to non-residents and must repay: government loans from the World Bank and other governments, companies' foreign loans and bonds, NRI deposits, trade credit. Short-term debt, due within a year, is what a run would hit first. In what currency the debt is owed we do not know from these tables: RBI's quarterly debt press release gives it, but DBIE does not carry it.

Who owes the debt matters as much as how much there is. Government debt abroad is mostly long-term: loans from the World Bank and friendly governments, and government bonds held by foreign investors. Company debt is commercial: if the rupee falls, a company that borrowed in dollars and earns in rupees has to find more rupees to repay.

The investment position is the balance sheet behind the flows. Liabilities include debt but also foreign-owned shares and factories, which are not repaid but earn dividends and profits that flow out as income. Assets include the reserves and Indian companies' businesses abroad. The net figure is negative because the world has invested more in India than India abroad.

The first estimate of a quarter is built from incomplete returns; services and income are the hardest parts to count and are revised most. The number in the newspaper on release day is a draft. Comparing this quarter's first estimate with a year-old quarter's revised figure mixes a draft with a finished copy.