)
Finance Minister P Chidambaram on Wednesday said the current account deficit (CAD) would be down to $50 billion during the current financial year, 43 per cent lower from the $88.2 billion during the financial year 2012-13. This means the deficit would be a bit lower at $23.1 billion in the second half of the current financial year than the $26.9 billion in the first half.
India's CAD reached an all-time high of 4.8 per cent of GDP in 2013-14. It remained high at 4.9 per cent of GDP in the first quarter of this financial year. However, curbs on gold imports together with rising exports narrowed it down to 1.2 per cent of GDP in the second quarter.
In the first half of the current financial year, CAD stood at 3.1 per cent of GDP.
For the entire 2013-14, India's nominal GDP is assumed by the Budget to grow to Rs 113 lakh crore, which at today's closing of the rupee against the dollar (61.54) amounts to $1.83 trillion. CAD at $50 billion may mean 2.73 per cent of GDP. GDP may turn out to be lower than what the Budget had projected and to that extent, CAD will be higher as percentage of GDP.
Addressing Petrotech 2014, Chidambaram said that the country is targeting to bring down CAD to 3 per cent of the GDP by 2016. "Currently, CAD comes around 4.8 per cent of the GDP, which we would like to bring down by 0.6 per cent every year until we reach a target of bringing it down to 3 per cent of the GDP. We expect the CAD figures to be around $50 billion during the financial year 2013-14," he said.
In order to keep a tab on CAD, the government has taken several measures like oil conservation drives and curbs on gold imports. Out of this, oil imports constitute a major pie as they contribute $164 billion out of the $491 billion. Chidambaram expressed hope that the country would come back to its growth path within three years time. India had posted a 5 per cent growth during the financial year in 2012-13. This comes at a time when the government is set to come up with revised growth estimates for the current financial year on February 7.
Talking about the energy industry in India, he said, "The global energy basket is changing rapidly. While oil producing countries want to assure higher prices, consuming countries want a stable price. India is an energy deficit country and global majors should tap this potential." The minister highlighted that more than 24,000 mega watt of power capacity is lying idle in India due to lack of supply of fuel, which needs to be addressed immediately.
"We are constantly reassessing and reviewing our policy models and also bringing in the necessary reforms to facilitate and incentivise the oil and gas sector and allow them to be more competitive at a global level. Not just that, the reforms should also position India as a viable destination for foreign investors," he said.
