Falling Crude, Strong Services to Keep India’s Current Account in the Comfort Zone
India’s current account deficit (CAD) is expected to stay well within manageable limits in FY26, even as global headwinds weigh on merchandise exports, according to a new report by Crisil.
The ratings agency estimates India’s CAD will average around 1% of GDP in FY26, up modestly from 0.6% in FY25, but far from levels that typically trigger macroeconomic stress. The cushion comes from a familiar trio: falling crude oil prices, a sustained surplus in services exports, and steady remittance inflows.
Goods exports are likely to face pressure as higher US tariffs and slowing global growth dampen demand. But Crisil notes that these risks are being offset by supportive trends on the imports and “invisibles” side of the balance sheet.
“We believe falling crude oil prices, the surplus in services and healthy remittances will keep the CAD from widening too much,” the report said.
The trend is already visible in recent data. India’s CAD narrowed to 1.3% of GDP in Q2 FY26, sharply lower than 2.2% in the same quarter last year, signalling improved external stability.
On the commodity front, Crisil expects crude oil prices to average $60–65 per barrel in calendar 2026, compared with $65–70 per barrel in 2025. Brent crude averaged $63.6 per barrel in November, down 14.5% year-on-year, easing India’s import bill and reducing pressure on foreign exchange outflows.
Beyond trade, the report also assesses India’s fiscal position. The Centre has targeted a fiscal deficit of 4.4% of GDP in FY26, down from 4.8% in FY25. To finance this, the government plans to borrow ₹6.77 lakh crore in the second half of the fiscal, taking total gross market borrowing to ₹14.7 lakh crore, about 5% higher year-on-year.
However, fiscal pressures remain. By October, the deficit had already reached 52.6% of the full-year target, driven by lower tax collections and higher capital expenditure. This was partly offset by stronger non-tax revenues and restrained revenue spending.
Taken together, Crisil concludes that supportive external factors and calibrated fiscal management should help India maintain macroeconomic stability in FY26 despite an uncertain global environment.