India's overall balance of payments has recorded a deficit of $4.4 billion for the first two months of the financial year 2027. This shift was triggered by a widening merchandise trade gap and a of $2 billion in May.
$4.4 billion
Balance of payments deficit in April-May
Surplus in Q4 FY26: $2.1 billion→$4.4 billion
⏳ Time Machine
How today’s news fits into the bigger picture
10 years ago
In 2016, India faced a similar external challenge as tapering global capital flows and rising commodity import bills put pressure on the rupee's exchange rate.
Last year
India recorded a comfortable current account surplus, supported by a boom in global software outsourcing and steady remittance inflows.
Last month
Economists predicted a widening trade gap as global commodity prices began climbing due to renewed geopolitical tensions in the Middle East.
Yesterday
The Indian rupee closed flat as the central bank intervened in the market to offset heavy dollar demands from oil importing companies.
Today
Official data reveals India's balance of payments slipped into a four-point-four billion dollar deficit for the April-May period.
What happens next?
Foreign index inflows into Indian government bonds are projected to stabilize the capital account, potentially restoring a surplus by late October 2026.
India’s macroeconomic position faces new pressure as the country’s balance of payments slipped into a deficit. According to fresh data, the nation posted a current account deficit of $2 billion in May, primarily driven by a widening gap between what India imports and what it exports. This trade imbalance, coupled with a slowdown in foreign portfolio inflows, resulted in a total balance of payments deficit of $4.4 billion for the April-May period. A deficit in the balance of payments means more foreign currency is leaving the country than entering it, forcing the Reserve Bank of India to dip into its foreign exchange reserves to stabilize the rupee. Economists warn that rising global energy costs could worsen this trend over the coming months.
💭 If you're wondering…
The current account deficit measures trade in goods and services, while the balance of payments deficit includes all trade plus capital flows like foreign investments.
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Official sources
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