According to the ICICI Bank Global Market report, the primary drivers for this revision include resilient invisible receipts and anticipated adjustments in trade components. The report noted that these projections include a reduction in gold imports to USD 55 billion from USD 72 billion last year.
The report outlined a sharp contrast between merchandise trade and invisible earnings. In FY26, the current account deficit remained steady at USD 25 billion, which represented 0.6 per cent of GDP, compared with USD 23 billion in FY25. This stability persisted on the back of a widening goods deficit of USD 337 billion, up from USD 287 billion in FY25.
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The report stated that invisible receipts made up for the rising trade deficit at USD 312 billion, marking an 18 per cent year-on-year growth. This expansion was driven by higher services exports at USD 217 billion, which grew by 15 per cent, and remittance inflows at USD 144 billion, showing a 16 per cent increase. Concurrently, the outgo on account of investment income remained flat at USD 48 billion in FY26.
Analyzing the quarterly performance, India’s current account recorded a surplus of USD 7 billion, or 0.7 per cent of GDP, in Q4FY26. This performance compares with a deficit of USD 15.5 billion, representing negative 1.5 per cent of GDP, in the previous quarter.
The report attributed this quarterly shift to a positive surprise in the current account driven by remittances, which went up by 17 per cent quarter-on-quarter to USD 41.2 billion. Additionally, the goods deficit moderated to USD 83 billion in Q4 from USD 96 billion in Q3.For the upcoming fiscal year, the report forecasted that the goods deficit is likely to increase further on the back of higher oil prices to USD 401 billion. This development is expected to push the current account deficit higher to 1.8 per cent of GDP for FY27 from 0.6 per cent recorded last year.
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The report added that while this trajectory would ideally have led to a BoP deficit in excess of USD 40 billion, because of which the rupee was under pressure, recent measures by the RBI and the government have ensured that the BoP ends in a surplus of USD 15 billion. Consequently, expectations for the domestic currency indicate far more stability and a tendency to appreciate.
Policy interventions, including the expansion of gilts in the Fully Accessible Route for FPIs and concessional FX swap schemes, are expected to alter the capital account trajectory. The report stated these two schemes should potentially see large inflows of USD 75-80 billion and thus, turn the BoP into surplus in FY27.