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India's BoP slips to $8.1 billion deficit; CAD widens

India's BoP slips to $8.1 billion deficit; CAD widens
India's Balance of Payments Deficit Expands to $8.1 Billion in Q1FY27 · rediff.com

India is a country that buys and sells many things with other countries.

From April to June, it spent more money on goods from other countries than it earned by selling its own goods.

This is called a deficit, and India's balance of payments slipped into an $8.1 billion deficit.

One big reason was that energy prices went up because of wars in the world, making imported fuel more expensive.

However, some things helped India, like money sent home by Indians working abroad, which grew by 34 percent.

India's savings of foreign money, called foreign exchange reserves, rose to a four-month high of $707 billion.

The Reserve Bank of India is not too worried because these numbers go up and down over time.

Experts also expect foreign money to flow back into India because of new bank schemes, which could improve things by the end of the year.

So while the country had an expensive few months, its big piggy bank of foreign money is still quite full.

Key facts

Balance of Payments (Apr-Jun)
-$8.1 billion deficit (vs +$4.5 billion a year ago)
Current Account Deficit
$3.1 billion (vs $2.9 billion a year ago)
Goods Trade Deficit
$85.7 billion in Q1 2026-27 (vs $68.9 billion)
Services Trade Surplus
$52.2 billion (vs $47.9 billion)
Net Transfers/Remittances
$41.4 billion, up 34% year-on-year
Net FPI Flows
-$9.6 billion outflows (vs +$1.6 billion)
Net FDI Inflows
$7.8 billion (vs $4.8 billion)
Forex Reserves
$707 billion as of August 7

Quotes

Madan Sabnavis

Chief economist at Bank of Baroda

“While the current account may remain pressurized in the coming quarters, the capital account will be largely positive due to the RBI measures on FCNR and ECBs that will bring about an increment in forex surplus in BOP of $30-50 bn by the end of the year.”
financialexpress.com rediff.com
“The rise in remittances was “contrary to expectations.””
financialexpress.com

Sources

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