MUMBAI, June 8 (Reuters) - India reported a surprise current account and balance of payments surplus in the January-March quarter of fiscal 2026 on strong earnings from the services sector, an increase in worker remittances and forex swaps conducted by the central bank.

The current account surplus stood at $7.1 billion, or 0.7% of GDP, in the final quarter of fiscal 2026, compared with $13.7 billion, or 1.4% of GDP, a year earlier, the central bank said on Monday.

In the October-December period, India had reported a current account deficit of $13.2 billion or 1.3% of GDP.

For the full year, the current account deficit (CAD) stood at $25.2 billion or 0.6% of GDP.

India's balance of payments (BoP) -- money coming into the economy netted off against money going out -- recorded a surplus of $7.2 billion in the January-March quarter, with a deficit of $23.6 billion for the full year.

"Two tranches of dollar/rupee buy/sell swaps of $10 billion each, conducted in the January-March quarter by the Reserve Bank of India, helped the capital account and led to a BoP surplus in the quarter," said Gaura Sen Gupta, chief economist at IDFC First Bank.

SUPPORT FROM SERVICES EXPORTS, REMITTANCES

In the January-March quarter, net services receipts rose to $60.4 billion from $53.3 billion a year ago.

"Services exports have risen on a year-on-year basis in major categories such as computer services and other business services," the RBI said.

India's merchandise trade deficit, however, widened to $83.4 billion in the March quarter from $59.3 billion a year earlier, the RBI said.

Private transfer receipts, which are mainly remittances by Indians employed overseas, increased to $43.5 billion from $33.9 billion year-on-year.

Foreign portfolio investments recorded a net outflow of $12 billion in the fourth quarter, higher than the outflow of $5.9 billion in the year-ago period.

India's balance of payments is expected to widen in the current financial year due to a surge in the country's energy import bill after the Iran war pushed up the cost of crude oil. Foreign investor outflows from the equity markets are also seen pressuring the country's external accounts.

"The CAD is expected to more than double in 2026-27 relative to the 2025-26 levels, owing to the surge in global energy prices following the West Asia conflict," said Rahul Agrawal, senior economist at rating agency ICRA.

Agrawal attributed the better-than-expected current account surplus and BoP in the January-March quarter to stronger worker remittances.

(Reporting by Ira Dugal and Chandini Monnappa; Editing by Ronojoy Mazumdar and Janane Venkatraman)