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Informist, Thursday, Jul. 16, 2026

 

By Pratiksha

 

NEW DELHI – Economists unanimously expect India's current account deficit to widen in the financial year ending March. They, however, diverge on the extent of the deficit amid persisting global uncertainties and fluctuating crude oil prices. Their estimates for the current account deficit for 2026-27 (Apr-Mar) range from 0.8-2.0% of GDP, against 0.6% of GDP in FY26, as per an Informist Poll of eight economists.

 

After touching a near four-year high of $122.53 per barrel in April after war broke out between the US and Iran, crude oil prices had fallen to around $70 a barrel earlier this month, below the pre-war level, after the two sides agreed to a peace deal. Now, however, fresh hostilities in West Asia have resulted in Brent crude oil price surging over 15% so far this month, with further risk on the upside.

 

"The global economic landscape remains highly volatile. Although oil prices have retreated from their recent highs, ongoing geopolitical uncertainty continues to keep the oil price outlook volatile," Rajani Sinha, chief economist at CareEdge Ratings, said in a note. CareEdge has lowered its current account deficit projection for FY27 to 0.8-1.2% of GDP from its previous projection of 2.1%, based on the assumption that crude oil price will average around $80-$85 per barrel in FY27.

 

India's current account was in a deficit of $25.2 billion in FY26, slightly higher than $22.9 billion in FY25. As a share of GDP, the deficit remained unchanged in FY26 at 0.6%. In the first two months of the current financial year, India's current account recorded a surplus of $2.8 billion, compared with a deficit of $4.1 billion in the corresponding period in FY26. In Apr-Jun, India's merchandise trade deficit widened over 26% on year to $86.86 billion.

 

Economists highlighted that while oil prices had eased in June following the announcement of a peace deal between the US and Iran, recent developments have again started pushing oil prices up, which can further inflate the country's import bill. The US and Iran have exchanged strikes on each other's assets over the past nearly a week despite their agreement in June to extend the ceasefire first announced in April, with Tehran also launching attacks on US allies in the region. While some economists assume average crude oil price of $75-$80 per barrel in FY27, others see it averaging at $85 per barrel.

 

Bank of Baroda said continued uncertainty over war and disruptions in global supply chains will also come in the way of a meaningful recovery in exports. In Apr-Jun, India's exports grew to $129.32 billion. "Overall, merchandise trade deficit is likely to be higher than last year which will put pressure on CAD. At the same time, remittances from Gulf countries could also be impacted due to war related disruptions," economists at the public-sector bank said in a note.

 

Despite the rising current account deficit, poll participants unanimously expect India's balance of payments to turn surplus in FY27 after two consecutive years of deficit. They expect the balance of payments to be in a surplus of $25 billion-$30 billion following the measures by the RBI and the government in June to spur foreign inflows. India's overall balance of payments recorded a deficit of $11.0 billion in Apr-May, compared with a surplus of $5.0 billion a year ago.

 

"While CAD widens, a slew of measures announced by the RBI and MoF (ministry of finance) are likely to bring in $50-$70 billion in FY27, boosting the capital account surplus, potentially turning the BoP into a surplus of $30 billion," Barclays said in a note. The balance of payments deficit was $23.6 billion in FY26.

DETAILS OF THE POLL ON INDIA'S CURRENT ACCOUNT DEFICIT FOR FY27

 

Participant	Estimate (% of GDP)
Bank of Baroda	1.8-2.0%
Barclays	1.7%
CareEdge Ratings	0.8-1.2%
Equirius Securities	1.2%
ICICI Bank	1.3%
IDFC FIRST Bank	1.7%
Kotak Mahindra Bank	1.5%
YES Bank	0.9%

 

End

 

US$1 = INR 96.34

Edited by Rajeev Pai

 

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