Current account deficit narrows to $ 5.2 bn in second quarter

Decline in gold imports and turnaround in exports helped narrow India's current account gap sharply to USD 5.2 billion, or 1.2 per cent of GDP, in the July-September quarter of this fiscal.
"Clearly BoP (Balance of Payment) position has improved significantly. The Current account position has improved significantly quarter on quarter and half year on half year. Trade deficit has also narrowed," Finance Minister P Chidambaram said.
The current account deficit (CAD), the difference between outflow and inflow of foreign exchange, was USD 21 billion, or 5 per cent of the GDP, in the second quarter of last fiscal.
On a BoP basis, there was a drawdown of foreign exchange reserves of USD 10.4 billion in second quarter as compared to that of USD 0.2 billion in the same period of last fiscal, RBI said in a statement.

It said the lower CAD during the second quarter was primarily on account of a decline in the trade deficit as merchandise exports picked up and imports moderated, particularly gold imports.
"Contraction in the trade deficit coupled with a rise in net invisibles receipts resulted in a reduction of the CAD to USD 26.9 billion (3.1 per cent of GDP) in H1 of 2013-14 from USD 37.9 billion (4.5 per cent of GDP) in H1 of 2012-13," it said.
"We are on target to contain CAD and despite some concerns expressed, we will contain the fiscal deficit at 4.8 per cent," Chidambaram said.

Both the government and RBI are expecting the CAD to be below USD 56 billion in the current fiscal compared to the record high of USD 88.2 billion, or 4.8 per cent of the GDP last fiscal.