RBI data reveals $30.8 bn BoP deficit in 2025-26, driven by dollar outflows
The Reserve Bank of India's (RBI) annual report for 2025-26 shows a Balance of Payments (BoP) deficit of $30.8 billion, a more than six-fold increase from the previous year. This deficit, entirely covered by drawing down foreign exchange reserves, is primarily due to a sharp fall in net foreign investments and a widening current account deficit (CAD). While the merchandise trade deficit decreased, the services surplus shrank more significantly, leading to an overall wider CAD of $30.2 billion. The capital account surplus also drastically reduced, exacerbated by Indians parking funds abroad and foreign portfolio investors pulling out $4.3 billion.
Key Points
- India recorded a Balance of Payments (BoP) deficit of $30.8 billion in 2025-26, a significant increase from the previous year's deficit.
- The deficit was primarily caused by a sharp decline in net foreign investments and a widening current account deficit (CAD).
- The services trade surplus shrank more than the merchandise trade deficit decreased, contributing to the wider CAD.
- The capital account surplus drastically reduced, partly due to Indians parking funds abroad and foreign portfolio investors (FPIs) pulling out funds.
- The entire BoP deficit was covered by drawing down India's foreign exchange reserves.
Exam Facts
- India's Balance of Payments (BoP) deficit was $30.8 billion in 2025-26.
- The current account deficit (CAD) was $30.2 billion in 2025-26.
- Merchandise trade deficit stood at $251.6 billion in 2025-26.
- Foreign portfolio investors (FPIs) pulled out $4.3 billion in 2025-26.
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