Encouraged by rise in exports and decline in gold imports, Economic Affairs Secretary Arvind Mayaram said the current account deficit (CAD) will come down to about $50 billion in the current financial year.
The CAD, which is the difference between inflow and outflow of foreign exchange, touched an all-time high of $88.2 billion or 4.8 per cent of GDP in 2012-13.
“Exports are doing fairly well ... month-on-month there might be slight blip here and there, but draw a line it will be straight and secular. It is not curving down. We are quite confident that CAD should be around $50 billion for the financial year,” Mayaram told PTI.
He said the trade deficit, which is the difference between export and import, has narrowed to $9.2 billion in November from $10.6 billion in October.
In the first half (April-September) of the current fiscal, the current account deficit came down to $26.9 billion (3.1 per cent of GDP) from $37.9 billion (4.5 per cent of GDP) in H1 of 2012-13.
Declining gold imports has also contributed to improvement in CAD, which dropped to 1.2 per cent in Q2 against 4.9 per cent in Q1.
Gold imports, according to Mayaram, fell to 19.3 tonnes in November from 162 tonnes in May.
In order to restrict the inward shipment of gold, the Government and RBI had announced various measures, including hiking the import duty to 10 per cent. With the decline of imports, there is a clamour that the Government should ease the curbs as they are encouraging smuggling.