India’s BoP Surplus Seen At USD 50 Bn In FY27, CAD At 1% Of GDP: SBI Research

New Delhi, Aug 19 (KNN) India’s balance of payments (BoP) is expected to record a surplus of around USD 50 billion in FY27, while the current account deficit (CAD) is likely to remain contained at about 1 per cent of GDP, according to SBI Research.

The report said strong foreign currency inflows are expected to support India’s external position. 

It noted that the Reserve Bank of India’s (RBI) special FCNR(B) deposit mobilisation scheme has attracted about USD 57 billion so far, with another USD 25-30 billion potentially flowing in during the remaining days of August. This could take total inflows to around USD 85 billion, ANI reported.

SBI Research said the early closure of the FCNR(B) window is unlikely to have a significant impact on external liquidity. It estimated that combined inflows through FCNR(B) deposits, overseas foreign currency borrowings (OFCBs) and external commercial borrowings (ECBs) could reach USD 80-85 billion.

Swap Cost Seen as Manageable

The report said concerns over the cost of the RBI’s swap facility may be overstated. It estimated the cumulative five-year hedging cost at around USD 10.5 billion, equivalent to about 1.45 per cent of India’s current foreign exchange reserves of nearly USD 700 billion.

SBI Research said the cost remains relatively small compared with the size of the country’s reserve buffer and could support external liquidity.

The RBI had also said at its latest Monetary Policy Committee (MPC) meeting that India’s external financing position remained supportive, aided by foreign direct investment and foreign portfolio investment flows, and that the balance of payments was expected to register a healthy surplus.

Rupee Outlook and Global Risks

SBI Research said the rupee’s appreciation following the FCNR(B) measures has so far been limited to around 0.1 per cent, significantly lower than the appreciation seen after the 2013 FCNR(B) scheme.

The report expects the rupee to strengthen towards Rs 95-95.5 per US dollar through the end of August and beyond, although it cautioned that the scale of appreciation could differ from the 2013 episode.

The report also flagged external risks, including rising 30-year US Treasury yields, which have approached 5.3 per cent, and the possibility of Brent crude prices moving towards USD 100 a barrel if disruptions around the Strait of Hormuz persist.

Focus on Reserve Diversification

SBI Research also recommended continued diversification of India’s foreign exchange reserves. It noted that gold’s share in the reserves reached a record 16.7 per cent in FY26 before moderating to 15.38 per cent as of August 7.

The report said the shift underscores the need to strengthen portfolio resilience while maintaining an adequate external reserve buffer.

(KNN Bureau)