India’s CAD does not Create Global Imbalances

By Daniel Hughes · February 19, 2026

The RBI Governor has reassured global audiences that India’s current account deficit (CAD) would not create imbalances in the global economy. The CAD is at 1.7% currently in spite of a trade deficit of almost 7% owing to NRI
remittances .

Remittances from NRIs are buffers to balance of payments, keeping
the CAD in check Addressing a gathering at a bank in Japan, Governor
of RBI, Y.V.Reddy admitted that India’s forex reserves are limited when compared with Japan’s in terms of imports and external debt.

The Governor reiterated that deregulation in India’s financial sector would fall in place as the real and fiscal sectors grow.

Deregulation and liberalisation would run parallel to the progress
in these sectors, he stressed.
Indian banking requires reforms in the banking sector, and should
be geared to meet the requirements of the growing economy, both
domestic and global.

Priorities have to be set within the legal
framework of the country to stay tuned to the evolving economy,
said the Governor.