Exports set to improve current account gap

Remarkable growth of over 36 per cent in merchandise exports in December 2010, is expected to improve India's current account scenario that represents net outflow of income from the country, barring capital movement.

Against the export target of $200 billion, the country's outward shipments are projected between $215-225 billion in the current fiscal, according to Commerce Secretary Rahul Khullar.

"Exports for December 2010 are $22.5 billion, imports are $25.1 billion. Trade deficit is only $2.6 billion, the lowest trade deficit in the last 3 years and that is very good news in terms of keeping our CAD in check," Khullar said.
    
The December exports growth was 33-month high, while imports contracted by 11.1 per cent.
    
With April-December 2010-11 exports growing by 29.5 per cent and imports by 19 per cent, the total trade deficit is expected to be $120 billion against the earlier estimates of $135 billion.
    
"You save $15 billion in your (import) bill..That's big money", the Commerce Secretary feels.
    
As a result of a "remarkable job" by exports, the country's current account gap, of which trade balance is a major component, is likely to be lower than 3.5 per cent, "which people,including economists from the International Monetary Fund were forecasting".
    
Some of the economists were even apprehensive of the current account gap being at 3.7 per cent of the Gross Domestic Product (GDP).
    
India's current account deficit, representing net flow of income out of the country barring capital movements, surged 72 per cent to $15.8 billion in the July-September quarter over the same period last year.
    
The current account deficit, which includes deficit in external trade of goods, services, besides net investment income, stood at 2.9 per cent of gross domestic product (GDP) last fiscal.