India Faces Third Consecutive Year of Balance of Payments Deficit Amid Weak Capital Inflows
India is projected to face a third consecutive year of balance of payments (BoP) deficit by FY26, driven by a widening current account deficit (CAD) and weakening capital inflows. Elevated crude oil prices and reduced foreign investments, including increased private equity and venture capital exits, contribute to this trend. Analysts estimate the BoP deficit could reach between $50 billion and $65 billion, potentially lowering forex reserves and challenging BoP stability. The situation marks a departure from previous years when strong capital inflows offset trade deficits.