India’s Current Account Deficit Set to Widen in FY26, While Forex Reserves Near Record High
Current Account Deficit Likely to Widen in FY26 India’s current account deficit (CAD) is projected to nearly double in FY26 , rising to 1.2% of GDP compared to 0.6% in FY25 , according to a report by Union Bank of India . The report highlights upward risks stemming from global trade dynamics, geopolitical developments, and fluctuations in commodity prices, particularly crude oil. Oil continues to be a key factor. Estimates suggest that every $10 per barrel change in crude prices could impact India’s annual current account balance by approximately $15 billion . Lower oil prices may ease the deficit burden, but volatility remains a concern. Trade Dynamics and July 2025 Trends India’s merchandise trade deficit widened sharply in July 2025 , reaching $27.35 billion , up from $18.78 billion in June , marking the highest levels since November 2024. Key drivers of the imbalance included: Non-Oil, Non-Gold (NONG) Deficit : Rose to $12.28 billion in July from $7.83 billion in ...