RBI, Government Move to Boost Capital Inflows: HDFC Bank Economist

The Reserve Bank of India (RBI) and the Government of India have unveiled a coordinated set of measures aimed at strengthening capital inflows and easing pressure on the rupee, according to Sakshi Gupta, Principal Economist at HDFC Bank.

Gupta said the measures combine short-term interventions with broader structural reforms, including changes in taxation on foreign portfolio investor (FPI) investments in government securities. She noted that the combined impact could help bridge an estimated $40-50 billion balance of payments gap projected for FY27.

“We see an appreciation bias for the rupee over the coming months as actual inflows resulting from these measures begin to materialize,” Gupta said.

Commenting on the RBI’s policy assessment, she observed that the central bank acknowledged downside risks to economic growth arising from supply chain disruptions and rising price pressures.

At the same time, Gupta described the policy stance as slightly hawkish, pointing to a 50-basis-point upward revision in the inflation forecast to 5.1 percent for FY27.

“The revised inflation outlook increases the likelihood of a rate-hike cycle beginning by the October policy review,” she said, adding that HDFC Bank expects a cumulative 50-basis-point increase in interest rates during FY27. [KNT]

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