Capital flows

In the news

• FPIs pull ₹52,100 crore from equities in October; 2026 outflows reach ₹3.12 lakh crore 19 October 2026 · The Hindu

  Foreign investors have pulled out nearly twice last year's total in under ten months. Why, and does it matter?

• Explained: Why central banks from the Fed to the RBI are raising interest rates again 18 October 2026 · The Hindu

  Four major central banks raised rates within a month. Can higher interest rates fix inflation driven by oil and war?

• India's current account deficit widens to $4.2 billion in April-June 2026 2 September 2026 · The Hindu

  Services and remittances grew, so why did the balance of payments slip into an $8.1 billion deficit?

Key facts

• FPIs sold a net ₹52,100 crore of Indian equities in October 2026 up to mid-month, after a ₹35,861 crore outflow in September. (19 October 2026)
• Net FPI equity outflows in 2026 have reached ₹3.12 lakh crore, nearly 1.9 times the ₹1.66 lakh crore of all of 2025. (19 October 2026)
• The Fed raised its target range to 3.75% to 4.00% on 16 September 2026, its first hike since July 2023. (18 October 2026)
• The ECB raised its deposit facility rate to 2.50% and the BoJ its rate to 1.25%, by a 7 to 2 vote. (18 October 2026)
• India's CAD widened to $4.2 billion (0.5% of GDP) in April-June 2026, from $3.4 billion (0.4% of GDP) a year earlier, as per RBI data released on 1 September 2026. (2 September 2026)
• The merchandise trade deficit rose to $86.1 billion, while net services receipts were $51.6 billion and private transfer receipts $42.9 billion. (2 September 2026)

Previous-year questions

1. 2024 · GS3 · 10 marks What are the causes of persistent high food inflation in India? Comment on the effectiveness of the monetary policy of the RBI to control this type of inflation.
2. 2022 · GS2 · 15 marks Besides the welfare schemes, India needs deft management of inflation and unemployment to serve the poor and the underprivileged sections of the society. Discuss.
3. 2019 · GS3 · 10 marks Do you agree with the view that steady GDP growth and low inflation have left the Indian economy in good shape? Give reasons in support of your arguments.
4. 2018 · GS3 · 15 marks How would the recent phenomena of protectionism and currency manipulations in world trade affect macroeconomic stability of India?
5. 2022 · Prelims With reference to the Indian economy, consider the following statements: 1. If the inflation is too high, Reserve Bank of India (RBI) is likely to buy government securities. 2. If the rupee is rapidly depreciating, RBI…
6. 2020 · Prelims With reference to Foreign Direct Investment in India, which one of the following is considered its major characteristic? (a) It is the investment through capital instruments essentially in a listed company. (b) It is a…
7. 2019 · Prelims Which one of the following is not the most likely measure the Government/RBI takes to stop the slide of Indian rupee? (a) Curbing imports of non-essential goods and promoting exports (b) Encouraging Indian borrowers to…
8. 2014 · Prelims With reference to Balance of Payments, which of the following constitutes/constitute the Current Account? 1. Balance of trade 2. Foreign assets 3. Balance of invisibles 4. Special Drawing Rights Select the correct…