Reading India's Balance of Payments Without the Panic

“Diagnosis should be based on data, and not what newspaper says.” That’s the whole session in one sentence, and Tantri says it about fifteen minutes in, right after telling the group he’s tired of doing “textbook macroeconomics” for its own sake. So instead of a model, he pulls up the RBI website — live, on screen, fumbling for the right menu for a solid two minutes before a student finds it for him — and reads out a real table: India’s balance of payments, 2025–26. No slides. Just the numbers, row by row, and the running question underneath all of them: does India actually have a current account problem right now, or are we borrowing a crisis from 1991 because it’s a comfortable story to tell?

Why “history repeats itself” is a lazy thing to say

Before touching a single number, Tantri spends a few minutes on something that sounds like a throat-clear but turns out to be the argument. Every time the rupee weakens, the comparisons come out automatically — 1991, 2013, Sri Lanka, Pakistan. He pushes back hard on the reflex itself:

“This kind of a statement that history always repeats itself is a very lazy statement. You know, if history were to repeat, then you don’t have to do anything, just read history. You know what will repeat. It is… the lesson of history is not… Niall Ferguson, for instance, is popularizing applied history. The main point of applied history is not to say that history is going to repeat. No. Understand how current situation is similar or different than last time. That is the whole point. It will repeat only if it is a similar situation.”

The implication is a discipline, not a slogan: before you invoke 1991, you have to actually check whether 2026 shares 1991’s structure. “You have 10 such examples, and which one is a correct comparison for what is going on now? That is very important.” Most of the commentary — his word is “lazy” again — just quotes a percentage depreciation and stops there, as if the number alone tells you whether it’s a crisis.

The forex reserve test

The first concrete check is the size of the war chest. India is sitting on roughly $700 billion in foreign exchange reserves. Tantri’s point is not that the number is large in some abstract sense — it’s that the number changes what the current depreciation means:

“This is the rupee that RBI wants it to be. It is not a desperate outcome where RBI is helpless. If RBI wanted, rupee could have been at 90. Rupee could have been at 87, at the cost of losing another $200, $300 billion of forex reserves, if they wanted.”

That’s the crux: today’s level is a chosen stance, not a helpless slide. RBI could defend a materially stronger rupee tomorrow — the money exists — and is choosing not to, because the future cost (a thinner reserve buffer, more vulnerability later) isn’t one it wants to pay right now. Compare that to 1991, where there wasn’t a choice to make: India’s entire reserves back then covered about fifteen days of oil imports — by his rough math, something like $8–9 billion against today’s $700 billion. Sri Lanka a few years ago, Pakistan, Bangladesh: same story, a one-way fall nobody could arrest. “They could have arrested it at a significant cost” — different mechanism, different history, wrong precedent.

Reading the table: goods, services, and the mistake newspapers make

Then the actual walkthrough. The two numbers he puts up first: $446 billion of goods exports against $783 billion of goods imports — a $337 billion goods deficit, worked out against a $3.7 trillion GDP (note the aside: it was $4 trillion when he last taught this — “there is no God-given rule that GDP will increase”). Of that $337 billion, oil ($53.8bn exported after refining, $173.9bn imported) accounts for about $120 billion, or roughly a third — “big… but not devastating.”

Here’s the correction he’s most insistent on: this goods number is not the trade deficit, even though “economic times and all” report it as one. Trade deficit has to include services. India runs a $216 billion services surplus — and it’s not shrinking, it’s accelerating. He’s blunt about not knowing whether AI is hollowing out IT services the way everyone in the room seems to assume: “TCS is dead, this guy is dead, Infosys is dead — that is what I hear… but when I see our service exports, every month it is accelerating.” Six or seven years ago, services were 40% the size of goods exports; today they’re 90%. Net it against goods and the actual trade deficit is about $121 billion — roughly 3.5% of GDP, against 2013’s comparable figure of 6–7%.

Add the primary income line (foreign firms’ profits and royalties paid out of India minus what Indian firms earn abroad — a further $48 billion deficit) and then the number he calls “the guy who is saving us all”: secondary income, i.e. remittances, at $155.3 billion, against outward remittances of essentially nothing. Net it all out and India’s current account deficit comes to about $25 billion — roughly 0.4–0.6% of GDP, against 2013’s 5.5%. April 2026, in fact, ran a small surplus.

The remittance dependency nobody in policy circles is tracking

Remittances have genuinely doubled in five to six years and India is now the unambiguous global No. 1 — “next best is less than $100 billion… nowhere close.” But Tantri flags a demographic clock under this number that he says he’s raised with senior RBI officials and found nobody had thought about: most of it comes from parents of people who emigrated in the late-90s/early-2000s IT wave, and those parents are now hitting 75–80. When they’re gone, the motivation to keep sending money weakens — and when NRI-owned property in India eventually gets sold, often because the diaspora children have no reason to keep it, that money leaves as a capital account debit instead. His own projection: remittances keep climbing for another 3–4 years, maybe toward $200–250 billion, then start declining. “It’s a post-dated check.”

The actual problem: not oil, the capital account

Having cleared the current account, Tantri turns to what he calls the real source of rupee pressure — the capital account. Two numbers: gross FDI inflow of $98.3 billion, a record high, against $91.4 billion flowing out, for a razor-thin net of $6.9 billion — up from $1 billion the year before, but nowhere near the $30–40 billion net FDI India used to run. His read: this isn’t “foreigners have lost faith in India” — the gross inflow disproves that — it’s that existing multinationals (Samsung, Hyundai) are increasingly exiting via IPOs and share sales instead of reinvesting profits, while India’s own retail SIP flows quietly absorb the shares they sell, masking the outflow even as it shows up in the rupee: “money is going out… if at all there is a single problem for the rupee, it’s this guy.” Add FIIs pulling roughly $16 billion out of government bonds and equity, and what used to be a reliable capital account surplus offsetting the current account deficit has essentially vanished.

Try it

India's goods deficit last year was about $337 billion, but Tantri insists that "goods deficit" and "trade deficit" are not the same thing, and that newspapers routinely conflate them. What closes most of that gap?

What You Can Now Do

Stop quoting the goods number as “the trade deficit.” If a headline reports a same-week trade deficit figure, it’s almost certainly the goods number only — services data lags by about ten days, so wire reports default to what’s already in hand.
Before accepting a historical comparison — 1991, 2013, Sri Lanka — check what was structurally true then that would need to be true now. Reserve coverage, whether the exchange-rate move was chosen or forced: these are checkable facts, not vibes. If the structure doesn’t match, the comparison doesn’t transfer, however often it gets repeated.
When you see rupee weakness, ask who is actually short of dollars. Here, it isn’t the current account — comfortably within 1% of GDP — it’s the capital account: existing foreign investors exiting via IPOs and share sales faster than fresh FDI and portfolio money arrive.
If your business runs on remittance-linked demand or NRI capital, build in the demographic clock: this money is tied to one generation’s aging parents, not a permanent feature of the balance of payments. Model it as temporary, however good the trendline looks today.

Editor’s note: This pairs with Tantri’s April essay on the REER, where he made the same underlying case — don’t panic about rupee weakness without checking the real data — using real effective exchange rate indices instead. Two different evidence bases, one instinct: check the balance sheet before you check the headline.