Clipped from: https://www.financialexpress.com/business/banking-finance/remittances-wont-slow-much-bop-comfortable-poonam-gupta/4224638/
RBI Deputy Governor Poonam Gupta highlights India’s resilient Balance of Payments, supported by a record $135B in remittances and surging FDI, despite geopolitical tensions and $16.6B in FPI outflows.
India’s BoP Shows Structural Strength: Remittances and FDI Buffer FPI Volatility
India’s balance of payments retains structural strength, with resilient remittances, services exports and FDI inflows, helping offset weaker portfolio flows and cushion the economy against external shocks, Reserve Bank of India deputy governor Poonam Gupta said on Friday.
Despite global uncertainties related to the West Asia conflict, Gupta expressed optimism about India’s growth and noted the effective transmission of monetary policy despite bond yield elevations.
“Our remittances are solid, $135 billion plus, (and they) only move in one direction, which is a healthy growth every single year. Even during Covid, they declined by (only) a tiny bit,” Gupta said, speaking at ICPP Growth Conference here.
India retained its position as the world’s largest remittance recipient in FY25, with inflows reaching a record USD 135.4 billion (around 3.5% of GDP). During April-December FY26, remittances stood at USD 110.9 billion, reflecting a robust y-o-y growth of 10.1% and placing full-year inflows on track to surpass the previous year’s peak. The ongoing West Asia conflict presents a material, albeit uncertain, risk to this income stream, given the continued importance of the Gulf Cooperation Council (GCC) economies as a source region.
“I would also like to believe now that the conflict is more narrowed down to a stalemate in the Strait of Hormuz and the rest of the region is not impacted…. migrants would return sooner. As the reconstruction effort starts, they will be employed more than before,” she said.
Gupta said India’s net services exports have been doing very well, and FDI inflows remain strong. “Looking at these components, I am confident the Balance of Payments has inherent strengths. These are structural, not cyclical, meaning shocks may occur but the strengths will endure.”
Portfolio flows have been weaker than in the past, but other parts of the Balance of Payments have offset that, she said. “So, I remain largely confident that even if a year appears more challenging, it will eventually return to the strengths seen in the past because of its structural nature,” she said.
Gross FDI inflows increased by 18.1% on year to USD 88.3 billion during April-February FY26. Net FDI improved to USD 6.3 billion in April-February FY26 from USD 1.5 billion in the corresponding period of FY25, despite persistently elevated FDI repatriation and outward FDI flows
Foreign portfolio investment (FPI) flows in FY26 were marked by significant volatility, with cumulative net outflows amounting to USD 16.6 billion, comparable in magnitude to the outflows observed during Covid-impacted FY22.
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