Rangarajan Sees Current Account Deficit At 1.7% Of Gdp

Reserve Bank of India (RBI) governor C Rangarajan yesterday said the current account deficit for 1996-97 would remain at the last years level of 1.7 per cent of gross domestic product.

Industrial growth this year should be between nine and 10 per cent. The fiscal deficit will be around five per cent of the GDP. It is our intention to bring it down to around four per cent, he said while addressing the concluding session of `Advantage Maharashtra convention here.

Rangarajan said there was no cause for gloom as the economy is strong and growing. For the last two fiscal years, the economy has grown at over seven per cent, and this year the growth should be 6.8 per cent. This is unprecedented, he said. Rangarajan said the drop in import growth has led to a shrinking of the current account deficit and it is easily manageable. The BoP position despite the redemption of India Development Bonds is at $19.3 billion and the current account deficit is easily manageable, he said.

 

Rangarajan stressed that drop in industrial and export growth should be looked at in the right perspective. Yes, industrial growth has slowed down. But the figures reveal that manufacturing growth in April-October 1996-97 over the previous year has dropped only 12.3 per cent to 12.1 per cent. Capital goods growth has grown from 15.1 per cent to 16.6 per cent. Most of the drop in industrial output is due to fall in electricity generation and mining, he said.