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India's Remittances to Hit $137B Amid West Asia Tensions & RBI's Hawkish Stance

Remittances to India are projected to reach an all-time high of $137-140 billion in FY26 before moderating slightly the following year, amid geopolitical tensions in West Asia. SBI Research's analysis of the RBI Governor's statement indicates it was the most cautious in recent meetings, though not signaling an imminent rate hike. The RBI has injected significant liquidity since February and projects average inflation at 4.6% and real GDP growth at 6.9% for FY27. Near-term food supply concerns are alleviated by a robust rabi crop, though volatility from crude oil and potential El Niño conditions persists.

Key Points: India Remittances to Reach $137B, RBI Inflation Outlook

  • Remittances may hit record $137-140B in FY26
  • RBI stance most hawkish in eight meetings
  • RBI projects 4.6% avg inflation for FY27
  • RBI injected ₹4.6 lakh crore liquidity since Feb
2 min read

Remittances to India likely to touch around $137 bn in FY27

India's remittances may hit $137-140B in FY26, moderating to $135-137B in FY27. RBI projects 4.6% inflation and 6.9% GDP growth for FY27.

"The choice of words... reflects deep understanding of the evolving geo-economic situation - SBI Research Report"

New Delhi, April 8

Remittances to India are likely to reach an all‑time high of $137-140 billion in FY26 before moderating to $135-137 billion in FY27, amid escalation in West Asia, a report said on Wednesday.

Further, enabling true dematerialisation of Retail Direct holdings could boost interoperability and attract strong interest to debt markets from retail investors, the report from SBI Research said.

Analysing the language of the central bank governor in the monetary policy meeting, the firm said the recent statement was the most cautious or hawkish out of the last eight statements but did not signal an imminent rate hike.

"The choice of words and the latent signal the latest statement carries reflects deep understanding of the evolving geo-economic situation in the world without hinting at any imminent rate hike with regulatory gaze hobbling between growth and inflationary concerns," the report said.

The governor highlighted that rapid depreciation thrust upon the INR off late is not in sync with India's macro fundamentals and a course correction was a much-needed recourse with currency now retreating towards its implied value, the report said.

On liquidity, SBI Research said the Reserve Bank of India has injected Rs. 4.6 lakh crore since the February monetary policy meeting, including OMO purchases of Rs. 1 lakh crore and variable rate repo operations of Rs. 3.6 lakh crore of various tenures.

RBI projected average inflation at 4.6 per cent for FY27, with core inflation at 4.4 per cent for FY27. It estimated FY27 real GDP growth at 6.9 per cent with progressive upgrades in the second half of current fiscal. Further, volatility in crude oil and other commodity prices along-with possible El Niño conditions impart considerable volatility to inflation.

However, the near-term food supply prospects have been boosted by a robust rabi crop providing some comfort, the central bank said.

- IANS

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Reader Comments

R
Rohit P
While the headline number is impressive, we must think about the families receiving this money. My cousin in the Gulf sends money home every month. It's their sacrifice that builds this figure. Hope the government ensures this inflow translates into real benefits for rural and semi-urban areas, not just big cities.
A
Arjun K
The report mentions the West Asia escalation as a risk. This is very concerning. A large part of our remittances comes from that region. If conflict worsens, it could hit these numbers and many families hard. The government should have contingency plans.
D
David E
As an observer of the Indian economy, the projected GDP growth of 6.9% alongside controlled inflation is the real story here. Strong remittances provide a crucial buffer, allowing the RBI to focus on growth without panic over the currency. A virtuous cycle seems possible.
S
Shreya B
The part about enabling dematerialisation for retail investors in debt markets is interesting but sounds very technical for the common person. RBI and banks should run simple awareness campaigns. How can my parents, who get remittances, safely invest this money for better returns than just FDs?
K
Karthik V
Good to see the RBI is actively managing liquidity. The injection of ₹4.6 lakh crore is massive. Hope this keeps interest rates in check for home and vehicle loans. The robust rabi crop news is a relief too. Let's pray for a good monsoon to keep food prices stable. 🙏

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