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Finance Minister P Chidambaram today asserted that Current Account Deficit (CAD) will come down to "more tolerable and acceptable" levels in 2012-13 once the fourth quarter numbers are out.
"If you are surprised by the largeness of the third quarter number, perhaps you will be surprised by the smallness of annual number. I think the annual number will be more tolerable than the third quarter number", he said while addressing a press conference here.
The CAD, which is the difference between inflow and outflow of foreign exchange, soared to a record high of 6.7% in quarter ended December 2012. The numbers of the fourth quarter (January-March 2013) are yet to be revealed.
"The fourth quarter number, (from) whatever RBI has been able to capture, will be much smaller and the number for the whole year will be more acceptable, more tolerable", the Minister said.
The government, Chidambaram added, has been trying to check gold import and encourage exports in a bid to contain CAD.
"The steps which we are taking to deal with CAD are well known steps. We have to increase our exports. We have to ensure that unnecessary imports don't take place. Gold imports are taking place because of inflation. We have to contain inflation", he said, adding the government is addressing the challenge.
Expressing concern over high CAD, Prime Minister Manmohan Singh earlier in the week had said "fiscal expansion has led to an expansion in the current account deficit which is expected to be around 5% of GDP. This is more than twice the traditional comfort level of say 2.5%."
Singh hoped that there would be modest reduction in CAD initially and hence "we must therefore plan to finance a higher than normal current account deficit for a few years."
During April-December 2012, CAD stood at $71.7 billion accounting for 5.4% of GDP as against $56.5 billion (4.1% of GDP) in the same period of 2011.
