CAD comes down to 3.6% in Jan-Mar; hits record 4.8% in FY'13
The current account gap in the March quarter was USD 18.1 billion, or 3.6 percent of GDP, lower than USD 21.7 billion deficit a year earlier.
New Delhi: Current Account Deficit (CAD) touched a record high of 4.8 percent of GDP in 2012-13 on rising gold and oil imports, though still better than market expectation, bringing relief to the government which is struggling to arrest the sliding rupee.
CAD, which is the difference between the outflow and inflow of foreign currency, however, moderated "sharply" to 3.6 percent of GDP in the last quarter of 2012-13 fiscal after it touched a historic high of 6.7 percent in the October-December quarter.
It was 4.4 percent in the March quarter of 2011-12.
The CAD was at USD 78.2 billion (4.2 percent) in 2011-12 fiscal, but a higher oil and gold imports pushed it up to USD 87.8 billion (4.8 percent) last fiscal, RBI data said.
The central bank's comfort level for CAD is 2.5 percent of GDP.
The Finance Ministry, meanwhile, said "the short-term increase or decrease in CAD should not be a cause for either optimism or pessimism".
"We must look at the figure at the end of the year where the CAD stands," it said.
The Rupee had touched a record low of 60.76 to a dollar yesterday. After the CAD data, the domestic currency recovered to 60.23 to the dollar.
"Markets have been over reacting as we have seen in the case of prediction for CAD last year which were much higher than 5 percent and we have seen that it is much lower than 5 percent," the Ministry said.
The RBI said petroleum and gold constituted about 45 percent of total merchandise imports during 2012-13. While petroleum import rose by 9.3 percent, gold import declined by 4.8 percent during the fiscal.
For the full fiscal, gold import stood at USD 53.8 billion, down from USD 56.5 billion.
Import of petroleum in 2012-13 fiscal rose from USD 155 billion to USD 169.4 billion.
According to the data, trade deficit in 2012-13 remained at an elevated level of USD 195.7 billion on account of a decline in merchandise exports by 1.1 percent and rise in imports by 0.5 percent on a year-on-year basis.
Decline in exports was due to fall in outbound shipment of manufactured items like engineering goods, textiles, gems and jewellery and also primary products like iron ore and minerals.
The RBI said the CAD widened in 2012-13 on account of "burgeoning trade deficit, decline in net invisible earnings due to sharp increase in investment income payments and only a modest rise in net services receipts".
It said while the FDI inflows moderated during 2012-13, there was a surge in portfolio investment during the period.
Net foreign direct investment (FDI) moderated to USD 19.8 billion in 2012-13 from USD 22.1 billion in 2011-12. Net portfolio investment, however, rose to USD 26.7 billion in 2012-13 from USD 16.6 billion a year ago.
"While rise in portfolio investment was essentially due to increase in equity investment, debt investment by foreign institutional investors has been lower as compared to the previous year," RBI said.
During 2012-13 there was an accretion of USD 3.8 billion in India's foreign exchange reserves as compared to a draw-down of reserves worth USD 12.8 billion in 2011-12, it said.
Crisil Chief Economist D K Joshi said: "CAD number is a positive surprise. But it may ,however, go up again the next quarter that is April-June, because of higher gold imports".
He further said for full 2013-14 fiscal, the CAD is expected to be at 4.5 percent.