India’s trade deficit for this fiscal year is likely to be around $142 billion, and the current account deficit for this period is expected to be contained at $39.3 billion or 1.9 per cent of the GDP, a Citigroup research report says.
According to the report continued restrictions on gold imports and strong exports growth helped in keeping the monthly trade deficit of the country stable at an average of $11.6 billion during the April—July period.
“With a cumulative trade deficit (April—July) at $45.3 billion, we maintain our view of a FY15 deficit at $142 billion. Consequently, we expect the FY15 current account deficit to be contained at $39.3 billion or 1.9 per cent of GDP,” the Citigroup research report said.
The current account deficit (CAD) is the difference between outflow and inflow of foreign exchange.
According to the Ministry of Commerce and Industry’s data, India’s trade deficit marginally narrowed down to $12.22 billion during July.
Trade deficit during the period (April—July) stood at $45.31 billion.
“Given recent monthly trends, we maintain our view of the FY15 trade deficit at $142 billion vs $138.7 billion in FY14,” the report said. The FY15 trade deficit forecast factors in higher gold imports and 11 per cent increase in non—oil/non—gold imports.
“As a result of a wider trade deficit, we expect CAD to increase marginally to $39 billion or around 2 per cent of GDP from $32.4 billion or 1.7 per cent of GDP,” Citigroup said.
The country’s trade deficit in the last fiscal (FY2014) declined to $138.6 billion from $190.3 billion in FY13.
With regards to rupee the report said that the INR is “likely to trade in the Rs 59—62 band with a positive bias”.