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A Parliamentary Panel has called for “bold policy initiatives” including steps to contain the current rupee depreciation so as to get complete handle over the current account deficit (CAD) situation.
With petroleum prices having shown a southward trend, the situation is ripe for “bold policy initiatives” by the government to maintain the trend of easing of CAD, Standing Committee on Finance headed by Veerappa Moily said in a action taken report tabled in Lok Sabha on Monday.
Noting that the unrelenting situation of CAD of the past few years has eased a bit alongside fiscal deficit, the Committee expected the Government will not let this opportunity go abegging.
This Panel has said that rupee depreciation needs to be contained to bridge the CAD-Gross Domestic Product (GDP) divide.
Simultaneously, competitive domestic production needs to be reinforced along with opportune policies to maintain the growth in exports.
This would go a long way towards maintaining sustainable CAD at an acceptable level of GDP.
“The CAD is a serious malaise gnawing at the vitals of the Indian economy and needs to be treated as an overriding priority”, the report said.
India’s CAD in the first half (April-September) of this fiscal was $ 17.9 billion (1.9 percent of GDP) as against $ 26.9 billion (3.1 percent of GDP) in same period last year, data released by Reserve Bank of India (RBI) recently showed.
CAD remains within RBI’s comfort zone of 2.5 percent of GDP.
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