Current account deficit hits record high of 6.7% in Q3
New Delhi: India's Current Account Deficit (CAD) widened to a record 6.7 percent of GDP in December quarter driven by heavy oil and gold imports and muted exports, prompting government to assert it will take more steps to contain the deficit.
The CAD widened in the third (October-December) quarter to USD 32 billion, from USD 20 billion (4.4 percent of GDP) in the corresponding quarter of last fiscal.
Terming the CAD, which is the difference between inflow and outflow of foreign funds, as large but not surprising, Finance Ministry said the government and the RBI would take additional steps to check the ballooning deficit.
During April-December 2012, CAD stood at USD 71.7 billion accounting for 5.4 percent of GDP as against USD 56.5 billion (4.1 percent of GDP) in the same period of 2011.
"The number (6.7 percent) is large though not surprising ... Both RBI and the government will continue to monitor the CAD and will take additional steps whenever warranted," the Finance Ministry said in a statement.
Gold imports in the April-December period stood at USD 38 billion. In 2011-12 fiscal, the import was USD 56 billion.
The trade deficit during December quarter widened to USD 59.6 billion, up from USD 48.6 billion in the corresponding quarter a year ago, as imports shot up by 9.4 percent during the period.
The Ministry said the CAD was financed through capital inflows without dipping into the foreign exchange reserves and hoped that the deficit would come down in the coming months on account of likely improvement in exports.
"CAD for fourth quarter is expected to be smaller. Government is committed to bringing down CAD over the time, as well as ensuring that it is financed safely," it said.
The government has already imposed curbs on import of gold by increasing duty with a view to contain ballooning CAD. Besides, it has taken steps to improve availability of gold.