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Current account deficit is estimated to come down to 1.3% of GDP in the fiscal ending March, helped by moderation in petroleum and gold imports, the Reserve Bank said today.
The CAD, which is the difference between the inflow and outflow of foreign exchange, was 1.7% of GDP ($32.4 billion) in 2013-14. It was at a record high of 4.7% ($88 billion) in 2012-13.
"The estimate of the current account deficit (CAD) for 2014-15 is currently placed at 1.3% of GDP, significantly lower than earlier projections," RBI said in its bi-monthly monetary policy statement.
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The fall in international crude prices translated into a sizable saving on account of Petroleum Oil Lubricants (POL) imports. Gold imports also moderated, coming off the seasonal cum pent-up demand spurt in September-November, it said.
Further, non-oil non-gold import growth remained firm and in positive territory.
The CAD in the April-September period of current fiscal stood at 1.9% ($17.9 billion), down from 3.1% ($26.9 billion) in the same period in 2013-14.
"The CAD has been comfortably financed by net capital inflows, mainly in the form of buoyant portfolio flows but also supported by foreign direct investment inflows and external commercial borrowings," RBI said.
India's trade deficit declined to a 10-month low of $9.43 billion in December 2014, mainly on account of falling imports due to slump in crude prices, though exports too have come down.
Imports bill declined by 4.8% to $34.8 billion during the month from $36.6 billion from December 2013, leading to improvement in the trade balance situation.
