Current account deficit moderates to 2.6% of GDP in FY11

India's current account deficit (CAD) moderated to 2.6% of the GDP in 2010-11 at $44.3 billion due to faster growth in exports.

The CAD, representing net flow of income out of the country barring capital movements, was $38.4 billion in financial year 2009-10, or 2.8% of the GDP.

India's GDP at market prices was estimated at Rs 78,75,627 (about $1.75 trillion) in 2010-11.

Moderation in CAD will reduce pressure on rupee-dollar exchange rate, experts said.

The government and experts were expecting CAD to be at around 3% of the GDP in the last fiscal.

As per the Reserve Bank of India (RBI) data released today, the trade balance (import-export) increased to $130.5 billion in the last fiscal from $118.4 billion in the previous fiscal.

Exports grew at about 37.4%, while the import bill increased at a lower pace of 26.6% during 2010-11.

Imports during the year under review were worth $380.9 billion against $300.6 billion, while exports were worth $250.5 against $182.2 billion in 2009-10.

Earnings from services exports and repatriation by NRIs in 2010-11 increased to $86.2 billion from $80 billion in comparative period last year.

India's exports, which were hit in the aftermath of global financial crisis in 2008, started improving since November 2009.

The RBI data, however revealed that the CAD more than halved to $5.4 billion in the January-March quarter year-on-year on better exports and earnings on services.