India's Economic Outlook: Factors Containing the Current Account Deficit

Crisil forecasts India's current account deficit to remain manageable, aided by lower crude oil prices, robust services exports, and steady remittance inflows. The report highlights that these factors will counterbalance pressures from sluggish goods exports. Furthermore, fiscal strategies aim to sustain macroeconomic stability amid global uncertainties.

In a new report, Crisil has projected that India's current account deficit (CAD) will stay within acceptable limits due to falling crude oil prices, a surplus in services exports, and consistent remittance inflows. Goods exports, however, are expected to feel the squeeze from the US tariff hikes and a slowdown in global economic growth.

Crisil expects India's CAD to average 1 percent of GDP by fiscal 2026, an increase from 0.6 percent in 2025. Despite global headwinds impacting goods exports, favorable conditions in import and invisible earnings sectors are anticipated to avert significant CAD widening.

Reflecting these mitigating factors, the CAD narrowed to 1.3 percent in the second quarter of fiscal 2026 from 2.2 percent a year before. The report estimates crude oil prices to hover between USD 60 and USD 65 per barrel in 2026, down from USD 65-70 in 2025, which is pivotal for relieving India's import pressures.

(With inputs from agencies.)