India can finance 3% CAD: Montek

Planning Commission Deputy Chairman Montek Singh Ahluwalia on Thursday said India could sustain a current account deficit (CAD) of three per cent of the gross domestic product (GDP).

“It (CAD) was a bit higher last year, but year-to-year variations do take place. We believe that size of currency account deficit can be financed by a steady inflow of FDI and institutional investments through portfolio flows,” he said. In 2011-12, CAD stood at 4.3 per cent. “We are seen as a fast-growing economy, and we have that potential. As long as that message is conveyed and people recognise that we welcome foreign investment and portfolio investment, I don’t think it would be difficult to finance it (three per cent CAD),” Ahluwalia said, while addressing the media on the sidelines of the annual convocation of the Tata Institute of Social Sciences.