Rise in CAD not worrisome, says Jaitley

The government on Tuesday asserted current account deficit (CAD) was not out of control, despite an increase during the second quarter of the current financial year and ruled out restoring curbs on gold imports at the moment. However, the opposition Congress did not buy the government's argument, saying it is not a happy situation for the economy. A day after the Reserve Bank data showed the CAD rising to 2.1 per cent of the gross domestic product in the second quarter, from 1.7 per cent in the first quarter, Finance Minister Arun Jaitley told the Rajya Sabha there was no cause for concern with a comfortable forex reserve position. Despite a rise in CAD, in fact, there was an accretion of $6.9 billion in foreign exchange reserves during the second quarter, albeit lower than $11.2 billion in the first quarter. This meant capital inflows were more than sufficient to finance CAD. "...since the foreign exchange reserve position in the country is reasonably comfortable, and the balance of payments is also broadly under control, I don't think there is any reason for concern, or, to take the kind of steps which we had to take in 2013 or 2014," Jaitley said.