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A Parliamentary Panel has called for “bold policy initiatives”, including steps to contain rupee depreciation, to have control over the current account deficit (CAD) situation.
With petroleum prices showing a downward trend, the situation is ripe for “bold policy initiatives” to maintain the trend of easing of CAD, the Standing Committee on Finance, headed by Veerappa Moily, said in an action taken report tabled in the Lok Sabha on Monday.
Pointing out that the unrelenting situation of CAD in the past few years has eased a bit alongside fiscal deficit, the Committee expressed hope that the Government will not let this opportunity go a begging.
The Panel said that rupee depreciation needs to be contained to bridge the CAD-Gross Domestic Product (GDP) divide.
Bridging the divideSimultaneously, competitive domestic production needs to be reinforced along with necessary policies to maintain export growth.
This would go a long way in 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 per cent of GDP) as against $26.9 billion (3.1 per cent of GDP) in same period last year, data released by the Reserve Bank of India recently showed.
CAD remains within RBI’s comfort zone of 2.5 per cent of GDP.
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