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West Asia Tensions Test India’s External Resilience as BoP Gap Widens

Large reserves provide a cushion against a near-term oil shock.

Overview

  • Brent crude has climbed to roughly $80–84 per barrel after shipping disruptions near the Strait of Hormuz, pressuring the rupee and equities and squeezing margins in oil-linked sectors, according to Shriram Wealth.
  • India’s balance of payments posted a $24.4 billion deficit in Q3 FY26 versus $10.9 billion in the prior quarter, with capital-account outflows driving the deterioration even as the current account narrowed to $13.2 billion (1.3% of GDP).
  • The Finance Ministry reports foreign-exchange reserves sufficient to cover more than 11 months of imports, with crude import dependence near 88.6% and a broader supplier base expanded from 27 to over 40 countries.
  • The RBI’s sensitivity estimates suggest a 10% oil-price rise could lift inflation by about 30 basis points, with the overall impact contingent on how long elevated prices persist.
  • Official guidance pegs FY27 real GDP growth at 7.0–7.4%, yet the external outlook remains vulnerable to volatile portfolio flows and the duration of the West Asia conflict.