RBI measures to secure $65–75 billion BoP surplus for India in FY27: Bank of Baroda
Synopsis
India's forex reserves have hit a record $729.3 billion after RBI mobilised $136.4 billion in foreign inflows — over 90 per cent through FCNR(B) deposits alone. A Bank of Baroda report now projects a $65–75 billion BoP surplus for FY27, arguing India is insulated against external shocks even as the US-Iran war continues to roil global energy markets.
Key Takeaways
A Bank of Baroda report projects India's balance-of-payments surplus at $65–75 billion in FY27 .
RBI measures mobilised $136.4 billion in foreign inflows, with $127.2 billion (over 90%) via FCNR(B) deposits .
India's forex reserves hit a record $729.3 billion after foreign currency assets rose by $47.9 billion .
The current account deficit is forecast at 1–1.25 per cent of GDP , cushioned by services exports and remittances.
RBI conducted VRRR auctions worth ₹53.5 lakh crore between 6 August and 2 September to absorb excess liquidity.
The US-Iran war and rising oil prices triggered the twin-deficit scare that prompted these emergency measures.
The Reserve Bank of India (RBI)'s drive to attract foreign inflows has delivered strong results, with a new Bank of Baroda report projecting that India will maintain a balance-of-payments (BoP) surplus of $65–75 billion in fiscal year 2027. The report, released on 4 September, credits RBI's targeted measures for shoring up external stability at a time of global uncertainty.
Current Account and Forex Reserves
The Bank of Baroda report pegs India's current account deficit (CAD) at approximately 1–1.25 per cent of GDP, supported by sustained strength in services exports and remittances. Meanwhile, India's foreign currency assets rose by $47.9 billion, pushing total forex reserves to a record $729.3 billion — a buffer that analysts say significantly improves the country's capacity to withstand external shocks.
How RBI Mobilised $136.4 Billion
RBI's initiatives collectively mobilised $136.4 billion in foreign inflows. The bulk — $127.2 billion, or over 90 per cent of total inflows — came through Foreign Currency Non-Resident Bank (FCNR(B)) deposits. Overseas Foreign Currency Borrowings (OFCBs) contributed $5.3 billion, while External Commercial Borrowings (ECBs) added $3.9 billion.
To make FCNR(B) deposits more attractive to Non-Resident Indians (NRIs), several banks raised interest rates on 3–5 year deposits from around 2–4 per cent to 6–7 per cent — a move that proved decisive in driving the surge in NRI inflows.
Liquidity Management and Yield Movements
On the domestic liquidity front, the RBI has been actively absorbing excess liquidity through Variable Rate Reverse Repo (VRRR) auctions totalling ₹53.5 lakh crore between 6 August and 2 September. The measures have had a visible impact on yields: most T-bill yields declined, with the 9-month T-bill yield falling 21 basis points (bps). Longer-dated government securities (G-secs) also softened, with 20-year and 50-year yields declining by 24 bps and 16 bps, respectively.
Context: US-Iran War and the Twin Deficit Narrative
The RBI and the government launched these measures in response to the economic turbulence triggered by the US-Iran war, which sent oil prices sharply higher and prompted persistent Foreign Portfolio Investor (FPI) outflows. Given India's high dependence on imported oil, concerns over external stability intensified, and the narrative of a 'twin deficit' — simultaneous pressures on the current account and fiscal deficit — gained considerable traction, contributing to volatility in domestic financial markets.
The Bank of Baroda report, however, takes an optimistic view going forward. 'The outlook on the economy is promising as even though there is still uncertainty over the situation in the Middle East, India now is insulated to withstand any unfavourable external shock,' the report stated. Whether that insulation holds will depend on how oil prices and global risk appetite evolve through the rest of the fiscal year.
Point of View
But the composition of inflows deserves scrutiny — over 90 per cent came from FCNR(B) deposits, which are interest-rate-sensitive and reversible if global rates shift. The RBI raised deposit rates sharply to attract NRI money, a lever that works until it doesn't. The Bank of Baroda's optimism on the BoP also rests on the assumption that services exports and remittances hold steady — two variables that are themselves exposed to US economic conditions. India's insulation from external shocks is real but conditional, and the twin-deficit narrative will return quickly if oil prices spike again.
NationPress
4 Sept 2026
Frequently Asked Questions
What is India's projected balance-of-payments surplus for FY27?
A Bank of Baroda report projects India's balance-of-payments surplus at $65–75 billion for fiscal year 2027, supported by strong foreign inflows mobilised through RBI measures and resilient services exports and remittances.
How much did RBI mobilise through its foreign inflow measures?
RBI's measures mobilised a total of $136.4 billion in foreign inflows. Of this, $127.2 billion — over 90 per cent — came through FCNR(B) deposits, with OFCBs contributing $5.3 billion and ECBs adding $3.9 billion.
What are India's current forex reserves?
India's total forex reserves stand at a record $729.3 billion, after foreign currency assets rose by $47.9 billion following RBI's inflow-boosting initiatives.
Why did RBI launch these foreign inflow measures?
The measures were launched in response to economic stress caused by the US-Iran war, which pushed oil prices higher and triggered persistent FPI outflows. Concerns about India's twin deficit — simultaneous pressures on the current account and fiscal deficit — caused significant volatility in domestic markets.
What is India's current account deficit expected to be in FY27?
The Bank of Baroda report forecasts India's current account deficit at approximately 1–1.25 per cent of GDP for FY27, supported by continued strength in services exports and remittance inflows.
