Overview
- HSBC, which on Monday projected India’s current account deficit at 2.3% of GDP for FY27, also estimated a balance‑of‑payments gap of about $65 billion.
- Portfolio investment, foreign direct investment and overseas borrowing have slowed, shrinking the capital account surplus and adding to pressure on external finances.
- The rupee has fallen about 11% over the past year and roughly 5% since the US–Iran conflict began, increasing the urgency to steady the currency.
- India’s foreign‑exchange reserves stand near $700 billion, yet HSBC’s dynamic test says buffers could dip below safety thresholds without about $30 billion in extra inflows or current‑account savings.
- Analysts recommend non‑rate tools such as RBI currency swaps for oil retailers, richer foreign‑currency deposits for non‑residents, scrapping withholding tax on sovereign bonds, hedged dollar bonds from state banks, a deposit push abroad and calibrated fuel price hikes.