MUMBAI (July 15): India's balance of payments (BOP) remained in a deficit for the second consecutive month in May, as capital outflows added to the pressure of a current account deficit, central bank data showed on Wednesday.
The deficit, however, narrowed compared to April when India reported a BOP deficit of $6.6 billion.
Here are some details from the May data:
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India's overall balance of payments recorded a deficit of US$4.4 billion in May this year compared with a surplus of US$4.4 billion in the year-ago period.
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Current account balance stood at a deficit of US$2 billion for the month compared with a surplus of US$700 million in May 2025.
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Net transfers, which include remittances from Indian workers overseas, rose to US$13.6 billion from US$10.5 billion a year ago.
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The capital account, which includes foreign portfolio investments, saw an outflow of US$2.4 billion in May 2026 compared with an inflow of US$3.7 billion in the same month last year.
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India reported a surprise surplus in current account and overall balance of payments for the January-March quarter of fiscal 2026 on strong earnings from the services sector, an increase in worker remittances and forex swaps conducted by the central bank.
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Worries over India's balance of payments deficit have been a crucial pain point for the rupee in 2026, as the Iran war lifted oil prices sharply and caused unabated capital outflows.
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While an interim ceasefire and policy measures to boost dollar inflows have prompted analysts to forecast a near neutral or modestly surplus BOP for the fiscal year ending March 2027, the most recent flare-up in the Middle East and its impact on oil prices will be in focus in the near term.
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