RBI Measures May Help India Maintain $75 Billion BoP Surplus in FY27: Bank of Baroda

The Reserve Bank of India's measures to attract foreign inflows have been a resounding success which will help India maintain a balance‑of‑payments surplus of $65–75 billion in fiscal 2027, a new report has said. The report from the Bank of Baroda forecasted the current account deficit at about 1–1.25 per cent of GDP recent strength seen in services exports and remittances. In addition, the RBI's initiatives mobilised $136.4 billion and are expected to strengthen India’s forex reserves which currently stand at record high and help defend the currency.

"The outlook on the economy is promising as even though there is still uncertainty over the situation in the Middle-East, India now is insulated to withstand any unfavorable external shock," the report said. India’s foreign currency assets increased by $47.9 billion, taking total forex reserves to a record $729.3 billion. Nearly $127.2 billion was mobilised through Foreign Currency Non-Resident Bank FCNR(B) deposits, accounting for over 90 per cent of total inflows.

Overseas Foreign Currency Borrowings (OFCBs) contributed $5.3 billion, while ECBs contributed $3.9 billion. Several banks raised rates on 3–5 year FCNR(B) deposits from around 2–4 per cent to 6–7 per cent, making the deposits more attractive to NRIs. Most T-bill yields declined, with the 9-month T-bill yield falling 21 bps. Longer-term G-sec yields also softened, with 20-year and 50-year yields declining 24 bps and 16 bps, respectively. The report noted that RBI is actively absorbing excess liquidity as it announced VRRR auctions totalling Rs 53.5 lakh crore between August 6 and September 2.

The government and RBI announced these measures to boost inflows as US-Iran war created significant challenges for the Indian economy, as rising oil prices and persistent FPI outflows led to concerns over external stability given India’s high dependence on imported oil. The narrative of “twin deficit” gained steam which led to considerable volatility in the domestic financial markets.

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