June 10: India’s current account deficit (CAD) is expected to continue into FY27, but timely policy support and liquidity measures by the Reserve Bank of India could help improve external stability and potentially push the balance of payments (BoP) into surplus, according to a report by State Bank of India.
The report notes that external pressures such as global trade uncertainties, volatile commodity prices, and uneven capital flows may keep the CAD in deficit. However, India’s strong services exports, steady remittances, and improving financial inflows are expected to provide a cushion.
It adds that the BoP outlook will depend heavily on capital inflows and global economic conditions. With appropriate policy support and stable macroeconomic fundamentals, India’s external position is likely to remain manageable despite near-term pressures.
Overall, the report suggests that while the CAD may persist, India’s external sector remains resilient with potential for improvement if favourable conditions continue.