Satya Prakash Pandey 16.00 Normal 0 false false false false EN-US X-NONE X-NONE

India’s current account recorded a surplus of $7.1 billion in Q4 FY2026 (0.7% of GDP) in contrast with ICRA’s forecast of a marginal deficit, largely owing to a surge in remittance inflows as well as narrower-than-projected primary income outflows. As a result, the current account deficit (CAD) was contained at just 0.6% of GDP in FY2026, similar to the FY2025 levels. Nevertheless, financing even these levels posed a challenge, amid negligible net capital inflows, leading to a $23.6 billion drawdown in reserve assets in FY2026. Looking ahead, ICRA expects the CAD to more-than-double to 1.7% of GDP in FY2027, owing to the surge in global energy prices following the West Asia conflict. While the recent measures to attract capital flows by the Government of India (GoI) and the Reserve Bank of India (RBI) are expected to provide some respite, these may remain insufficient unless net FDI inflows improve materially from the current levels.

India’s current account reverted to surplus of $7.1 billion (0.7% of GDP) in Q4 FY2026: This was in contrast to ICRA’s expectation of a marginal deficit, largely led by a surge in remittances (YoY: +31%; QoQ: +17%) and lower-than-expected primary income outflows. The turnaround to a surplus in Q4 FY2026 from a CAD ($15.5 billion; -1.5% of GDP) in Q3 was led by a narrower merchandise trade deficit (to $83.4 billion in Q4 from $95.9 billion in Q3) and higher earnings from invisibles (to $90.5 billion from $80.4 billion).