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Informist, Friday, May 1, 2026

--RBI Gupta: Not worried about remittances going down due to West Asia war 
--CONTEXT: RBI Deputy Governor Gupta at Isaac Centre for Public Policy event 
 

NEW DELHI – India's balance of payments has an inherent strength that is likely to hold up despite the impact of the war in West Asia, Reserve Bank of India Deputy Governor Poonam Gupta said Friday. The senior central bank executive said she was not worried remittances from the region, or overall, would go down.

"Our remittances are solid, right? $135 billion plus, only move in one direction, which is a healthy growth every single year," Gupta said at an Isaac Centre for Public Policy event here. "Even during COVID, they declined by a tiny bit," she said, referring the global pandemic in 2020.

A few sectors have been cyclically impacted but India's migrants to West Asia make up only 40% of remittances, she said. The remittance numbers were better than some estimates, though Gupta said the primary data comes to the RBI with some lag. Federal Bank, following its March-quarter earnings, said remittances from West Asia had increased in March due to the uncertainty. The bank has a sizeable pool of depositors in the affected region.

Speaking at an event in Amsterdam Friday, RBI Governor Sanjay Malhotra also said he expects net capital flows to improve in 2026-27 (Apr-Mar) compared with the financial year ended March. Gupta said that some migrants who had returned to India may have back accumulated savings, while the reduction of intensity in the conflict since a ceasefire was declared on Apr. 8 also augurs well for remittances.

"But I would also like to believe now that the conflict is more narrow down to a stalemate in the state of Hormuz, and the rest of the region is not being targeted or impacted," she said. "And as reconstruction effort starts, they will be employed more than before," Gupta said, echoing a sentiment she expressed at the Monetary Policy Committee meeting last month.

India's sources of foreign inflows are not cyclic but structural, which would sustain in the face of shocks like the West Asia crisis, Gupta said. In addition to remittances, net services have been doing "very, very well", she said. Data released by the RBI Thursday showed India's services trade surplus rose 14.3% on year to $216.68 billion in financial year 2025-26 (Apr-Mar). Gupta also cited strong FDI inflows, which have grown over 18% on year to $88.30 billion in Apr-Feb, according to latest data.

The Strait of Hormuz has been effectively shut over the past two months after the US and Israel attacked Iran, pushing global crude prices higher by over 60%. India's import bill is expected to balloon since it imports over 85% of its domestic crude oil needs. Nearly half of these make transit through the key waterway in peacetime. This is seen widening India's current account deficit and leading to a weaker balance of payments. 

The RBI deputy governor acknowledged she may be optimistic on some sides but said the structural strength on the balance of payments is a result of India's policy frameworks, including from the government. Gupta said she was quite confident that a sporadic year may be challenging on the balance of payments front but it will go back to its structural strength soon.  End

US$1 = INR 94.91

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Reported by Priyasmita Dutta and Sagar Sen

Written by Aaryan Khanna

Edited by Akul Nishant Akhoury

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