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The trade balance for the period between April to October, this year, was reported at $90.7 billion and if the government could contain the trade deficit to $150-155 billion this fiscal, it will be good for growth, said Union Finance Minister P Chidambaram. Speaking in an interactive session with the export industries in Chennai, he added that he will be happy if the Current Account Deficit (CAD) is controlled below $56 billion as the Reserve Bank of India (RBI) governor has pegged recently.
"Last year, for the full year, the trade balance was $190 billion. This year from April to October we have just crossed $90 billion, in a period of seven months. We still have five months to go. Second half is always better economic activity...Let us assume that the trade gap grows a little more, doesnt matter. As long as we are able to contain the trade deficit to about $150-155 billion, I think we are still on the good ground," he said.
It is important that the trade deficit must be reduced and the best way to that is increasing exports. Though the imports must be moderated, it cannot be compressed to more than an extend. The finance minister urged the importers to do the best in next four months and 10 days to make sure that exports continue to grow at the same rate in October, of 13.5% a month.
The country saw three or four months of good growth in exports and in October, exports grew by 13.5% and in a period from April to October, the exports grew by 6.3%.
"That is a good sign. Month after month exports have picked up. The reasons, of course, is the more attractive exchange rate. We are trying to facilitate exports, to make it easier to exporters and RBI is also extending support," he said.
While the domestic savings is the one big pillar of the country's economy, with the savings rate at 30.8% during the worst year, the second big pillar is exports, he said. The world trade is still sluggish with IMF's update on October 2013 projects world's trade in the current calender year as 2.9% growth.
He urged that the exporters should do their best in the next four months and 10 days to increase their exports to improve the growth, like the growth of 13.5% in October, this year.
Speaking on the currrent account deficit, Chidambaram added that the government has taken a number of steps in the beginning this year we took a number of steps to control the current account deficit, in consultation with the RBI and pegged the possible CAD at $70 billion. On November 1, the finance minister was able to revise it further down towards $60 billion and about a week ago the RBI Governor pegged it at below $56 billion. "I will be very happy to do below $56 billion," he said.
