The only way to contain current account deficit (CAD) is to increase domestic production of oil and coal and restrain gold consumption, Finance Minister P. Chidambaram has said.
Even as Chidambaram reiterated the need to restrain gold consumption at a Parliamentary Consultative Committee meeting, official foreign trade data released on Monday showed India’s gold and silver imports at a whopping $8.3 billion in May.
India’s gold and silver imports in April-May stood at about $15.8 billion.
The agenda for Monday’s meeting was: ‘The Current Account Deficit-Implications and Measures to Contain the Deficit.’
“In order to increase production (of coal and oil), we must get our policies and priorities right as long-term measures”, Chidambaram said.
Despite all odds, the Government was able to finance the CAD and also added around $3 billion to the forex reserves in 2012-13, he said.
Chidambaram expressed confidence that this year too, CAD would be financed without dipping into reserves.
The Finance Minister said the main reason for the large CAD was India’s huge dependence on import of items such as oil, coal and gold.
He said that as the world economies are in recession, India could not do much to counter external factors.
All European economies, except Germany, are in recession and so is the case with Japan and other developing economies. Only the US economy is showing some signs of revival.
However, India continues to remain a desired destination for foreign direct and institutional investment, he added.
He said the Government was looking at foreign direct investment caps to see if they were indeed serving the purpose. Otherwise the caps could be revisited, he added.
Chidambaram said the Government was proactively working towards operationalisation of 215 stalled projects involving about Rs 7 lakh crore, with a view to giving a push to production activity. firstname.lastname@example.org