India's current account deficit is projected to widen sharply to 2.3% of GDP in FY27 from 0.9% in FY26, according to a report by foreign brokerage HSBC. As reported by PTI, this significant deterioration is attributed to elevated oil prices and external sector pressures facing the Indian economy. The latest developments show that Brent crude has surged past $111 per barrel, with global crude prices now trading in the $105-110 range due to the ongoing Middle East conflict around the Strait of Hormuz, which carries around 20% of the world's energy supplies. HSBC has assumed crude prices to average $95 per barrel, combined with trends across oil, gold, core goods, services trade and remittances to arrive at this projection.
The HSBC report projects the balance of payments deficit to widen substantially to $65 billion in the current fiscal year from $35 billion in the previous fiscal. According to the brokerage, these projections are based on assumptions of crude oil averaging $95 per barrel, combined with trends across oil, gold, core goods, services trade and remittances. The latest data shows that India's import bill climbed again in April 2026, rising 10% year-on-year with the oil import bill increasing to $18.6 billion compared with an average of $13 billion in Q4 FY26. The trade deficit widened to $28.4 billion in April 2026, compared with $27 billion in April 2025 and $20.7 billion in March 2026. The HSBC BoP forecast has been made after growing through trends in portfolio inflows, FDI flows, and external commercial borrowing (ECBs).
HSBC has analyzed India's forex reserves and opined that the nearly $700 billion kitty seems sufficient from the traditional perspective, but suggested the need to look at it from a dynamic perspective, better for the current times of heightened risks amid recurring global shocks. The report recommends using a dynamic approach, benchmarking adequacy ratios against the lowest 10th percentile thresholds from India's own history to ensure minimum support levels are available. While India is above all the thresholds currently, it would fall below the 10th percentile threshold if the balance of payments estimates play out. Around $30 billion of extra forex reserves via extra inflows or current account savings would keep all buffers above the 10 per cent threshold, according to the report.
SBI Research projects India's economy to grow at 6.6% in FY27, compared with an estimated 7.5% in FY26, citing the impact of rising crude oil prices. The report estimates that every $10 per barrel increase in oil could widen the current account deficit by 30–35 basis points, raise inflation by 35–40 basis points, and reduce GDP growth by 20–25 basis points. Despite global uncertainty, India continues to show resilience with credit growth expected to remain strong in the first half of FY27 and domestic consumption supporting growth. However, foreign investors are pulling money out of Indian equities, with net outflows touching ₹27,048 crore so far this month and ₹2.2 lakh crore withdrawn from Indian equity markets in 2026.
The rupee has slipped to a fresh all-time low, touching 96.25 against the US dollar, falling about 5.5% this year from its previous levels. According to LKP Securities, technical support is now seen near 96.55 while immediate resistance is placed around 96.00–96.10. The currency pressure stems from higher crude oil prices, a stronger US dollar, and global uncertainty, with the dollar index standing at 99.32 showing continued strength. Investor wealth has taken a hit with a cumulative erosion of ₹5,85,751.13 crore since February 28, though this is less than the ₹51.7 lakh crore loss in March when markets were more severely impacted.
