India’s remittance inflows are projected to reach a record $137–140 billion in FY 2025–26 (FY26) before stabilising at $135–137 billion in FY27, according to a report by SBI Research.
The estimate is based on strong inflows of around $110 billion till December FY26, compared to $100 billion in the same period last year.
Drivers of Remittance Growth
The expected rise in remittances is largely attributed to:
- Geopolitical tensions in West Asia
- Continued inflows from overseas Indian workers
However, the report highlights that growth is likely to remain steady rather than accelerate significantly in FY27.
RBI’s Monetary Policy Stance
The outlook follows the recent decision by the Reserve Bank of India’s Monetary Policy Committee (MPC) to:
- Keep the policy repo rate unchanged at 5.25%
- Maintain a neutral stance
This indicates a cautious, wait-and-watch approach amid global uncertainties.
Cautious Tone in RBI Governor’s Statement
According to the SBI report:
- The RBI Governor’s latest statement is the most cautious so far
- Frequent references to:
- “Uncertainty”
- “Risk”
- “Elevated energy prices”
- “Shocks and disruptions”
This signals concerns over a possible supply-side crisis, especially due to energy shocks, which monetary policy alone cannot address.
GDP Growth Outlook
- FY26 growth: 7.6%
- FY27 growth (projected): 6.9%
The moderation is due to:
- High energy prices
- Global supply disruptions
Inflation Outlook
- FY27 inflation: 4.6%
- Core inflation: 4.4%
Key Factors:
- Volatility in crude oil prices
- Possible El Niño conditions
- Supply-side uncertainties
However, a strong rabi crop is expected to support food supply and help contain inflation.
External Sector Trends
- Exports may face pressure due to global slowdown
- Services sector remains strong and resilient
- Remittances continue to support external stability
Policy Outlook
- No immediate indication of a rate hike
- Expectation of a prolonged pause in policy rates
The RBI is likely to wait for greater clarity on global economic conditions before making further policy moves.
Conclusion
The report highlights that while remittances remain a strong pillar of India’s external sector, global uncertainties and supply-side risks are prompting a cautious monetary policy approach. Despite these challenges, India’s economic fundamentals remain relatively resilient.