He also stressed on the importance on FDI, FII and External Commercial Borrowings (ECBs) to fund the CAD, which stood at USD 38.7 billion or 4.6 per cent of the GDP at the end of first half of the current financial year.
Addressing a press conference, Chidambaram said gold import constituted a chunk of the imports and was a huge drain on the current account. Suppose gold imports had been half of the actual level, that would have meant India's foreign exchange reserves would have increased by USD 10.5 billion, he said.
Appealing for a moderation in the demand for gold which leads to large imports, he said, "I may add that we may be left with no choice but to make it a little more expensive to import gold. This matter is under government's consideration."
While the CAD was indeed worrying, Chidambaram said it was within India's capacity to underscore the crucial importance of FDI and FII.
"As I have said before, attracting foreign funds to India has become an economic imperative. I am confident that even the year ends with a slightly larger CAD than last year, we would be able to finance without drawing upon reserves," he said. MORE
