Current Account Deficit to be less than 3%: Montek

RBI said yesterday that CAD in 2013-14 will be $56 billion

Encouraged by surging exports, Planning Commission today said the current account deficit will be definitely less than 3% of GDP in 2013-14 fiscal as per its latest assessment.

"I think that the current assessment is that it is definitely less than 3%. That is our assessment," Planning Commission Deputy Chairman Montek Singh Ahluwalia told reporters here.

The CAD, which is the difference between outflow and inflow of foreign exchange, touched an all-time high of $88.2 billion or 4.8% of the GDP in 2012-13.

Earlier, the government had projected CAD at $70 billion for 2013-14, but was revised downwards to $60 billion by Finance Minister P Chidambaram because of declining gold imports and recovery in exports.

The Reserve Bank said yesterday that CAD in 2013-14 will be $56 billion and there was no fundamental reason for the rupee depreciation.

"Our estimate now is that CAD this year will be $56 billion, less than 3% of GDP and $32 billion less than last year... Of course, some of that compression comes of our strong measures to curb gold import," RBI Governor Raghuram Rajan had said at press conference on Wednesday.

Recovery in global markets helped India post 13.47% increase in exports, the highest growth in the last two years, to $27.2 billion in October.

Besides, during the first seven months of this fiscal, gold and silver imports declined by 12.86% to $24 billion from $28 billion in the same period last year.

Ahluwalia said: "I believe that Governor of the Reserve Bank has said, (it would be) 2.7% or something like that. Frankly, between 4.8% CAD last year and 2.7% this year, on that front the news is unambiguously good."

About the rupee depreciation, he said, "We are not living in a world of fixed exchange rate. So you should not get nervous if currency moves a little bit. People know that this is the world of flexible currency. So it is not really news, one way or the other way."

The rupee had declined to all time low of 68.85 on August 28. It strengthened from that level. Today, the rupee rose by 19 paise, or 0.30%, to end at 63.11 against the dollar.