Daijiworld Media Network – New Delhi
New Delhi, Jun 18: India's current account deficit (CAD) is expected to widen sharply to 2.2 per cent of GDP in FY27 from 0.6 per cent in FY26, primarily due to elevated crude oil prices and persistent global trade disruptions, according to a report by Crisil.
The report noted that Brent crude prices are projected to average between USD 90 and USD 95 per barrel during the current fiscal, around 32 per cent higher than the average recorded in FY26, increasing pressure on India's external balance.
India's merchandise trade deficit rose to USD 28.2 billion in May 2026, compared to USD 22.6 billion during the corresponding month last year. Exports registered strong growth, rising 18 per cent year-on-year to USD 45.2 billion, up from 13.8 per cent growth recorded in April.
Petroleum exports surged by 54.9 per cent, while core exports increased by 12.3 per cent to USD 34.2 billion. Crisil attributed the sharp rise in petroleum exports largely to a low base effect and a substantial increase in crude oil prices during May.
However, on a month-on-month basis, petroleum exports declined to USD 8.4 billion in May from USD 9.6 billion in April, reflecting lower crude prices compared to the previous month after a sharp rise linked to geopolitical tensions in West Asia.
According to the report, Brent crude averaged USD 107.1 per barrel in May, down 8.7 per cent from April levels. Despite recent easing, energy prices are expected to remain elevated as global supplies may take several months to fully normalise.
Crisil pointed out that oil remains India's largest contributor to the goods trade deficit, accounting for around 36 per cent of the deficit in FY26.
The agency also cautioned that Indian exports could continue to face challenges from lingering disruptions in global trade and supply chains, even if geopolitical uncertainties in West Asia ease.
Given the combined impact of higher energy costs and external trade pressures, Crisil expects India's current account deficit to rise significantly during the current fiscal year.