Current account deficit increases to 4.9% of GDP in India: RBI

Oct 01 2013, 09:50 IST
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Govt initiatives likely to ease pressure on CAD in India in the coming quarters. Reuters Govt initiatives likely to ease pressure on CAD in India in the coming quarters. Reuters
SummaryHigh gold and oil imports pushed current account deficit (CAD) in India.

portfolio investment occurred essentially from the third week of May 2013 after the US Fed indicated the possible tapering of quantitative easing," RBI said.

Although the capital inflow was in surplus, higher trade deficit led to a draw down in the forex reserves. India's forex reserves currently stands at over USD 270 billion.

Petrol, oil, lubricant import rose to USD 42 billion in Q1 of current fiscal, from USD 39.4 billion in the same period last year.

The initiatives taken by the government and the RBI to contain import of gold and encourage flow of foreign funds into the country is likely to ease pressure on CAD in the coming quarters.

High CAD has put pressure on Indian currency, which touched a low of 68.86 to a dollar on August 28. It closed at Rs 62.60 today.

Meanwhile, the data on India's international investment position showed that net claims of non-residents on India decreased by USD 12.5 billion over the previous quarter to USD 296.9 billion as at end-June 2013.

The foreign-owned assets in India decreased by USD 25.7 billion over the previous quarter to USD 731.5 billion as of June end this year.

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