Current account deficit widens to 4.9 of GDP in first quarter

High gold imports,decline in merchandise exports broadens the gap

India8217;s current account deficit CAD in the first quarter of the current fiscal April-June of 2013-14 was 21.8 billion,which works out to a disconcerting 4.9 per cent of GDP,according to data released by the RBI on Monday.

High imports of gold and oil largely led to a worsening of the trade deficit during the quarter,coupled with a slow recovery in net invisibles income and services,resulting in the sharp widening of the CAD to 21.8 billion in the latest reported quarter from 16.9 billion or 4.4 per cent in the corresponding quarter of the previous fiscal.

The CAD,or the difference between inflow and outflow of foreign exchange,had declined to 3.6 per cent of GDP in the January-March quarter after touching a record high in the October-December quarter. The government plans to bring down CAD to 3.7 per cent or 70 billion in fiscal 2013-14,down from 4.8 per cent or 88.2 billion in 2012-13.

The silver lining,though,is that the CAD estimates a major factor responsible for the recent fall in the rupee are expected to sharply improve in the coming quarter on the back of sharply higher export numbers and a moderation in oil and gold imports.

The trade deficit in Q1 of 2013-14 increased owing to a rise in imports and some decline in merchandise exports. Excluding the increase in gold imports of 7.3 billion8230; CAD would work out to 14.5 billion,which translates into 3.2 per cent of GDP, the RBI said.

The trade deficit widened further to 50.5 billion in Q1 from 43.8 billion a year ago. External debt was at 388.5 billion as on June 30,a decline of 0.9 per cent over March end.

Fiscal deficit at two-thirds of target during April-August

The Centres fiscal deficit touched two-thirds of its full year target in just four months of 2013-14 led by a slowdown in tax revenue and high plan spending.

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Between April and August this year,the Centres fiscal deficit touched Rs 4,04,651 crore or 74.6 per cent of the Budget estimate BE of Rs 5,42,499 crore. Its revenue deficit stood at 3,31,827 crore or Rs 87.4 per cent of the full fiscal target of Rs 3,79,838 crore.

Revenue receipts rose to Rs 2,54,272 crore or 23.9 per cent of the BE,between April and August,same as that in a year ago. Tax receipts slowed to Rs 1,83,686 crore or 20.8 per cent of the target. ENS