New Delhi, Aug. 18 -- India's current account deficit is likely to widen in FY27, with the goods deficit expected to rise to USD 390 billion amid strong domestic demand and elevated imports. However, the sharp turnaround in capital flows should remain supportive of the INR in H2, according to ICICI Bank.

The private lender noted in its report that India's goods deficit widened sharply to USD 85.7 billion in Q1 FY27 from USD 68.9 billion a year ago. This increase was mainly driven by elevated oil prices and a surge in non-oil-non-gold imports.

Notably, the non-oil-non-gold deficit alone increased to USD 55 billion in Apr-Jul FY27 from USD 42 billion last year.

However, despite the widening merchandise deficit, the current account defici...