India's high trade deficit due to oil, not gold import: HSBC
"The biggest risk to the exchange rate is the current account deficit (CAD) which is almost entirely on account of oil imports. But I know all the focus is on gold," HSBC head of global markets for India Hitendra Dave told reporters here.
The comments come on the back of raging debate over rising gold import and its impact on CAD, which hit a record high of 5.4 per cent in second quarter.
Both the Reserve Bank as well as the government have taken a slew of steps to curtail gold demand. They are also planning to launch financial instruments which reduce the need to physically import the yellow metal.
The oil bill, which stood at USD 140 billion in FY'12, will come down only if crude prices go down by 10-12 per cent and the rupee is constant. Both are not happening, Dave said.
India imports over 70 per cent of its oil demand.
"Oil is the biggest risk, the other inputs could be coal...may be the energy basket," he said, underplaying the role of gold imports leading to higher CAD.
Gold imports constituted around 35 per cent of CAD (difference between exports of goods, services and total imports) in FY12 when it stood at 4.2 per cent. RBI has said CAD was a big concern vis-a-vis macroeconomic stability.
Another reason for the rising trade deficit is
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