0
Login
Economic Outlook & Macro Trends

India’s CAD pegged at muted 0.5% of GDP in Q1 FY2027; expected to rise to manageable 0.9% in FY2027 amid improved financing conditions

Thematic Report 02 Sep 2026

India witnessed a modest current account deficit (CAD) of $4.2 billion in Q1 FY2027 (0.5% of GDP), despite the shocks engendered by the West Asia conflict including the surge in global commodity and crude oil prices. This is only slightly higher than the deficit of $3.4 billion in Q1 FY2026 (0.4% of GDP), as the sharp rise in merchandise trade deficit was offset by the healthy expansion in net invisible earnings. However, with this and capital outflows of $5.8 billion, the country reported a drawdown of reserves to the tune of $8.1 billion in Q1 FY2027. 

ICRA expects the CAD to widen in Q2 and Q3 FY2027 from the Q1 levels, which would push up the full-year print to ~0.9% of GDP, up from 0.7% in FY2026. However, this would be comfortably financed, aided by the sizeable foreign currency non-resident bank (FCNR(B)) inflows, which should lead to an accretion to reserves in FY2027, after a gap of two years.


Download Report
Ask Our Industry Analyst Get in touch with our Business Representative
Please enter your name
Please enter your mobile number
Please enter your email id
Please enter your company name
Name should not be greater than 50 characters
Please choose sector
Please enter your query
Query to have atleast ten characters
Query should not be greater than 1,000 characters
Please verify you are not a Robot.