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 "Import, export, trade")
The trade deficit rose to $86.1 billion, or 9.47 per cent of GDP, from 6.83 per cent a year ago
Chief Economic Advisor (CEA) V Anantha Nageswaran recently said that balance of payments (BoP) pressure would remain a near-constant challenge, citing rising imports and dependence on key commodities.Â
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Within the BoP, the current account yielded a deficit (CAD) in the first quarter of financial year 2026-27 (Q1FY27), reversing the surplus seen in Q4FY26, as the merchandise trade deficit widened. Â
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The trade deficit rose to $86.1 billion, or 9.47 per cent of gross domestic product (GDP), from 6.83 per cent a year ago. The July figures indicated that CAD may be even higher in Q2FY27. However, one must be cautious in interpreting this, since the trade deficit narrowed in August. Â
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The services surplus cushioned only part of the trade gap. Adding to the strain, heavy foreign portfolio investment (FPI) outflows weighed on the capital account since Q2FY26. Â
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The July figures give hope on this front. Foreign direct investment (FDI) has also been on the rise after negative flows in Q3FY26. A sharp $21 billion drawdown from forex reserves financed the CAD because the capital account was also in deficit in Q1FY26. The July figures give hope on this front too.
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First Published: Oct 02 2026 | 11:12 PM IST
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