FinMin expects CAD to decline to $45 bn in FY14

Posted By: Religare
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FinMin expects CAD to decline to $45 bn in FY14
Amid restrictions on gold imports and contraction in trade deficit, the Current Account Deficit (CAD) is likely to fall by 50 per cent to USD 45 billion in the FY 14. "CAD will be between USD 40-45 billion and there will also be an accretion of USD 10 billion to forex reserves during this fiscal," finance ministry official told media.

The Reserve Bank had last month projected CAD to be at less than USD 50 billion or 2.5 per cent, down from USD 88.2 billion or 4.8 per cent of GDP in 2012-13.

The official expressed the confidence that there will be an accretion to foreign exchange reserves as FII inflows have been quite robust."FII inflows have been quite robust in this fiscal which has helped in containing the CAD. There has been an improvement in trade deficit on account of better performance of exports," the official said.

CAD had touched a record high of USD 88.2 billion in 2012-13. However, following a series of measures by both the RBI and the government, it is likely to drop drastically.

In the first half (April-September) of 2013-14, CAD narrowed to USD 26.9 billion (3.1 per cent), from USD 37.9 billion (4.5 per cent) in the first half of 2012-13.

Dion Global Solutions Ltd.

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