FuelLed by high imports of gold and oil,the current account deficit (CAD) touched a record 4.8 per cent of the gross domestic product in 2012-13,but was marginally lower than the estimated 5 per cent. The government,guessing rightly,that the better than expected numbers will ease the pressure around rupee,released the data on Thursday,a day ahead of schedule.
The rupee recovered from an all-time low of 60.72 against the US dollar on Wednesday to rebound by 53 paise to close at 60.19 after the CAD numbers were released. The CAD for the fourth quarter of the last fiscal has moderated sharply to 3.6 per cent from the historic high of 6.7 per cent in the third quarter. Burgeoning trade deficit along with significant decline in invisible earnings caused widening of CAD during the year, the Reserve Bank of India said on Thursday.
Although the numbers point to a sharp correction in the CAD,it is still much higher than the 4.2 per cent CAD in 2011-12 or the RBIs comfort level of 2.5 per cent.
Analysts believe that the CAD,which is the difference between outflow and inflow of foreign currency,will moderate further in the current fiscal but register an uptick in the first quarter of the fiscal.
The fourth quarter data is in line with expectations and shows a significant improvement compared to the third quarter. We expect the CAD in 2013-14 at 4.4 per cent of the GDP but it has probably worsened in the April to June quarter due to higher than expected gold imports, said Samiran Chakraborty,head of research,Standard Chartered Bank.
The finance ministry,however,brushed off all concerns saying that the short-term increase or decrease in the CAD should not be a cause for either optimism or pessimism and only full fiscal data should be given importance. Markets have been overreacting as we have seen in the case of prediction for CAD last year which were much higher than 5 per cent and we have seen that it is much lower than 5 per cent, the ministry said.
Petroleum and gold contributed about 45 per cent of total merchandise imports in 2012-13. While gold imports stood at $53.8 billion last fiscal,as against $56.5 billion in 2011-12,petroleum imports rose to $169.4 billion from $155 billion. Trade deficit in 2012-13 stood at $195.7 billion due to a drop in merchandise exports and rise in imports.
External debt up 13% at $390 bn
Mumbai: Indias external debt rose by nearly 13 per cent to $390 billion in 2012-13,mainly due to rise in short-term trade credit and external commercial borrowings (ECBs) on the back of high current account deficit,the Reserve Bank of India said on Thursday. The external debt was at $345.5 billion at end-March 2012. PTI