Falling oil prices, services surplus and steady remittances to keep India’s CAD in check: Crisil

India’s current account deficit (CAD) is expected to remain in a comfortable range in fiscal 2026, supported by falling crude oil prices, a surplus in services exports , and steady remittance inflows , even as goods exports face pressure from global challenges, according to a report by Crisil .

The rating agency expects the CAD to average around 1 per cent of GDP in fiscal 2026, slightly higher than 0.6 per cent of GDP recorded in fiscal 2025. While global headwinds such as US tariff hikes and a slowdown in global growth are likely to weigh on goods exports, positive developments on the import and invisible earnings side are expected to limit any sharp widening of the deficit.

“Falling crude oil prices, the surplus in services, and healthy remittances will keep the CAD from widening too much,” the report said.

A current account deficit arises when a country’s imports of goods, services, and transfers exceed its exports and transfers, resulting in a net outflow of money. Reflecting this trend, India’s CAD narrowed to 1.3 per cent of GDP in the second quarter of fiscal 2026, down from 2.2 per cent in the same quarter last year.

On the commodity front, Crisil expects crude oil prices to average between USD 60 and USD 65 per barrel in 2026, compared with an estimated USD 65–70 per barrel in 2025. Brent crude averaged USD 63.6 per barrel in November, marking a 1.6 per cent decline month-on-month and a sharp 14.5 per cent fall year-on-year. Lower oil prices are seen as a key factor in easing India’s import bill and supporting external stability.

The report also reviewed the government’s fiscal position. The Union Budget aims to reduce the Centre’s fiscal deficit to 4.4 per cent of GDP in fiscal 2026 from 4.8 per cent in fiscal 2025. To meet funding needs, the government plans to borrow Rs 6.77 lakh crore, nearly half of its total budgeted borrowings, in the second half of the fiscal year. Overall gross market borrowing for fiscal 2026 is estimated at Rs 14.7 lakh crore, up 5 per cent from last year.

While the fiscal deficit reached 52.6 per cent of the full-year target until October,higher than 46.5 per cent in the same period last year due to lower tax revenues and higher capital expenditure, higher non-tax revenues and lower revenue expenditure helped contain further increases.

Crisil concluded that a combination of supportive external factors and calibrated fiscal management is likely to help India maintain macroeconomic stability, even amid global uncertainties.