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Kotak MF projects a FY27 balance-of-payments surplus — and a 50 bps rate hike

Surging capital inflows and a GDP upgrade to 6.7% sit alongside a forecast that inflation firms enough to prompt tightening in H2 FY27.

6.7%FY27 GDP forecast
Kotak Mutual Fund's latest macroeconomic report projects that India will post a Balance of Payments (BoP) surplus in FY27—while forecasting a 50 bps Reserve Bank of India (RBI) rat
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$30.7BQ1 FY27 gross FDI
$28B+FCNR inflows
50 bpsProjected H2 hike

Kotak Mutual Fund's latest macroeconomic report projects that India will post a balance-of-payments surplus in FY27, while simultaneously forecasting a 50 basis-point RBI rate hike in the second half of the year.

The report cites a surge in capital inflows — gross FDI rose to $30.7 billion in Q1 FY27 from $26.7 billion a year earlier, paired with over $28 billion in FCNR deposit inflows. It also revised the FY27 GDP growth forecast up to 6.7%, citing resilient domestic manufacturing and services.

On inflation, Kotak sees FY27 headline easing to 5.0% but Q1 FY28 ticking up toward 5.3% — the rationale for a possible 50 bps hike in the second half.

Why it matters

A balance-of-payments surplus expands the RBI's foreign-exchange reserves and strengthens its ability to defend the rupee. But if forward inflation firms alongside global monetary tightening, the central bank could shift from its current neutral 5.25% stance toward draining liquidity to anchor expectations. The balance of payments buys currency stability; the inflation path sets the terminal rate.

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Finsamudra Desk6 Aug 2026, 1:45 pm IST
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