New Delhi, July 14, 2026: India’s current account deficit for the second quarter of CY26 is tracking around 1.5 per cent of gross domestic product by June-end, a report said on Tuesday.
The capital account and the overall balance of payments are likely to remain in deficit for the quarter, the report from HSBC Global Investment Research said.
The report forecast inflation to average nearly 5 per cent in FY27.
External Position Remains Under Pressure
Debt inflows picked up in June, and the external position should improve as non-resident Indian deposits under the Reserve Bank of India’s foreign exchange scheme begin to flow through later in the third quarter.
India’s goods trade deficit widened modestly to $30.4 billion in June from $28.2 billion in March, the report noted.
Softer oil and gold prices kept the net oil trade deficit unchanged at $14.5 billion and the gold trade deficit flat. However, the net non-oil, non-gold trade deficit widened to $15 billion.
Non-oil export growth was the standout, expanding for a third consecutive month with average growth of about 8 per cent month on month, helped by lower US tariffs that created a window to accelerate shipments.
Exports to the US grew an average of 5 per cent month on month, and engineering goods, electronics, gems and jewellery were the key export categories reporting strong sequential growth in Q2 2026.
Inflation Outlook And Risks
June CPI inflation came in at 4.4 per cent year on year, higher than last month. Excluding gold and silver, headline CPI was at 3.6 per cent year on year.
"Inflation hasn't become broad-based as yet. Our diffusion index indicates that roughly 70 per cent of items in the CPI basket are still rising at less than 4 per cent year on year."
Food inflation rose higher than anticipated, led by a broad-based rise in cereals, protein items (milk, egg, meat and fish) and edible oil. Vegetable prices deflated in sequential terms despite a sharp rise in tomato, chilli and garlic prices.
Also Watch:
El Niño conditions are likely to intensify further in the months to come. Temperatures are trending above normal, and reservoir levels are below those recorded at the same time last year, collectively contributing to keeping food prices elevated, the report noted.
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