CAD will come down to USD 50 bn in 2013-14: Economic Affairs Secretary

New Delhi – Encouraged by rise in exports and decline in gold imports, Economic Affairs Secretary Arvind Mayaram said the current account deficit (CAD) will come down to about USD 50 billion in the current financial year.

The CAD, which is the difference between inflow and outflow of foreign exchange, touched an all-time high of USD 88.2 billion or 4.8 percent of GDP in 2012-13.

“Exports is doing fairly well … month on month there might be slight blip here and there, but draw a line it will be straight and secular. It is not curving down. We are quite confident that CAD should be around USD 50 billion for the financial year,” Mayaram said.

He said the trade deficit, which is the difference between export and import, has narrowed to USD 9.2 billion in November, from USD 10.6 billion in October.

The CAD in the first half (April-September) of the current fiscal came down to USD 26.9 billion (3.1 per cent of GDP), from USD 37.9 billion (4.5 per cent of GDP) in H1 of 2012-13.

Declining gold imports has also contributed to improvement in the CAD, which dropped to 1.2 percent in Q2, as against 4.9 percent in Q1.

Gold imports, according to Mayaram, fell to 19.3 tonnes in November, from 162 tonnes in May. In order to restrict inward shipment of gold, the government and the RBI had announced various measures, including hiking import duty to 10 percent. With the decline of imports, there is a clamour that the government should ease the curbs as they are encouraging smuggling.