Nearly a fortnight after imposing import curbs on 19 items, the government is mulling is another round of customs duty hike on 10 items in a bid to rein in the pressure on Current Account Deficit (CAD) due to higher oil prices and the falling rupee, TV news reports said.
On September 26, the government had hiked customs duty on a range of products from AC, fridge to jet fuel by 5%-10% to curb their import. The second list of import curbs is likely in a couple of days.
On one hand, the government has exuded confidence in achieving the fiscal deficit target of 3.3% of the GDP, a finance ministry official recently told news agency PTI that there were concerns over slippage in case of CAD.
Last month, amid rupee rout and rising crude oil prices, the government held a crucial economic review meeting, in which it was decided that “immediate steps” were needed to control CAD.
The decision to impose import curbs was among five steps the government decided to take in the meeting, which was held on September 14. The government removed curbs on Indian banks issuing Masala bonds and said that it will review mandatory hedging conditions for infra loans with respect to External Commercial Borrowings.
India’s CAD widened to 2.4% in the first quarter of the financial year 2018-19, the Reserve Bank of India (RBI) data showed, while International Monetary Fund (IMF) has predicted that it will widen to 3% in the current financial year.
The IMF has said that the CAD will accelerate to 3% of the GDP in FY19, worse than 2.8% predicted earlier as compared to 1.9% last fiscal year.