2 weeks ago
India's BoP slips to $8.1 billion deficit; CAD widens
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.
India's Balance of Payments slipped to an $8.1 billion deficit in the April-June quarter of 2026-27, against accretion of $4.5 billion a year ago.
The current account deficit widened to $3.1 billion from $2.9 billion a year earlier, driven by a war-related spike in global energy prices.
The goods trade deficit rose to $85.7 billion in Q1 2026-27 from $68.9 billion a year ago, partly offset by a services trade surplus that rose to $52.2 billion.
The capital account slipped to a $5 billion deficit as net FPI outflows hit $9.6 billion, while net FDI inflows rose to $7.8 billion.
Foreign exchange reserves rose to a four-month high of $707 billion as of August 7, and the overall BoP recorded a $2.9 billion surplus in June.
- Who
- The Reserve Bank of India released the data; Bank of Baroda chief economist Madan Sabnavis commented on the trends.
- What
- India's Balance of Payments slipped to an $8.1 billion deficit and the current account deficit widened to $3.1 billion in the April-June quarter.
- Where
- India.
- When
- April-June quarter of fiscal year 2026-27; data released on a Friday in mid-August 2026.
- Why
- A war-driven spike in global energy prices widened the merchandise trade deficit, while large FPI outflows worsened the capital account.
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











