Exports dip for seventh month, raising CAD worries
The steady contraction in exports coupled with the import bill — inflated to an extent by the weak rupee — even in a slowing economy has raised concerns about the current account deficit (CAD), which stood at a worrisome 4.3% of the GDP in 2011-12 and is officially forecast to be 3.5% in the current fiscal.
The steady fall in exports is likely to prompt the government to announce incentives by the weekend to boost shipments.
CAD occurs when a country’s total import of goods, services and transfers is greater than its total export of goods, services and transfers. The CAD stood at 3.9% in the first quarter of this fiscal, much lower than 4.5% in the previous quarter.
The Q2 CAD figure is expected later this month.
A few weeks ago, Crisil said a moderation in import growth could help CAD to be restricted at 3.1% in 2012-13, but a significant widening of the trade deficit since September has now raised fresh concerns on this front.
The demand slowdown in western markets led to India’s exports declining 4.17% in November to $ 22.3 billion while imports grew 6.35% to $41.5 billion.
Pertinently, Standard & Poor’s on Tuesday said the Indian government’s
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