There is news of relief regarding India’s current account deficit (CAD). According to a CRISIL report, India’s CAD will not increase much in FY 2026 despite global economic challenges and pressure on commodity exports. The main reasons behind this have been said to be the fall in crude oil prices, surplus in export of services and stable remittances.
According to the report, India’s CAD may average around 1 percent of GDP in FY 2026, while it was 0.6 percent in FY 2025. Although there is likely to be pressure on commodity exports due to US tariff policy and global economic slowdown, support from the import side and invisible income side will keep the deficit limited.
Also read: Achievement: Record Rs 1.76 lakh crore raised from IPO in 2025, momentum will continue in the new year also
What is current account deficit?
When a country’s imports (goods, services and transfers) exceed its exports, it is called a current account deficit. This means that there is a net flow of money out of the country.
Crisil says falling crude oil prices, persistent surplus in services exports and strong remittances from abroad will help keep CAD under control. The effect of this is that CAD decreased to 1.3 percent of GDP in the second quarter of the financial year 2026, which was 2.2 percent in the same quarter last year.
Big relief from crude oil
On the commodity front, the report estimates that the average price of crude oil in calendar year 2026 could be $60-65 per barrel, while in 2025 it was estimated to be $65-70 per barrel. The average price of Brent crude in November stood at $63.6 per barrel, which is a decline of 1.6 percent month-on-month and 14.5 percent year-on-year. This is expected to reduce India’s import bill and strengthen external stability.
Keep an eye on fiscal situation also
The financial position of the government has also been assessed in the report. The Union Budget targets to bring fiscal deficit to 4.4 per cent of GDP for fiscal year 2026, which was 4.8 per cent in 2025. The government plans to borrow Rs 6.77 lakh crore in the second half of the year to meet its needs. Gross market borrowings for the full year are estimated at Rs 14.7 lakh crore, up 5 per cent year-on-year.
However, by October, fiscal deficit had reached 52.6 percent of the full year’s target, which was 46.5 percent in the same period last year. The reason for this was low tax collection and high capital expenditure. Nevertheless, growth in non-tax revenues and decline in revenue expenditure prevented the deficit from widening further.
Overall, CRISIL believes that favorable global factors and balanced fiscal management will help India’s economy remain stable even amid global uncertainties.
