New Delhi: Chief Economic Advisor Raghuram Rajan Tuesday said the country should aim at bringing down the current account deficit (CAD) to below 5 percent in the current fiscal aided by softening in global commodity prices.
"What we have to aim is to bring it below 5 percent for this year ... Below 4 percent in next year and even lower in coming years," he told reporters here.
He stressed on the need to attract more long term foreign funds and increase exports over the medium term.
"What will help us (to bring down CAD) is that the exports seem to be picking up once again, commodity prices are low, especially oil. Oil imports are at USD 170-180 billion, so even a 10 percent decline in those will be a substantial benefit for us in terms of CAD," he said.
The CAD, which is difference between the outflow and inflow of foreign currency, touched a record high of 6.7 percent in the October-December quarter on the back of rising oil and gold imports.
During April-December 2012, CAD stood at USD 71.7 billion accounting for 5.4 percent of GDP.
Rajan, however, said these numbers for fourth quarter would be significantly lower and the country should aim at a CAD of 2.5-3 percent over the long term.
"If you look at the fourth quarter (2012-13) it is going to be significantly below 6.7 percent and perhaps below 4 percent. However, there will be volatility in the number for the year," he said.
Rajan further said the fiscal deficit for 2012-13 fiscal would be less than 5.2 percent.
On increasing investments and putting economy back on high growth path, he said the government would continue to make the process of doing business easier by reducing transaction costs and hurdles in land acquisition.
"We are not out of woods yet. We are trying to revive the economy and there are tentative signs that the economy is strengthening. There are still some worries. We cannot become complacent. If we need to get this economy back on track we have to keep doing some of these things," Rajan said.
After growing over 8 percent for two consecutive years, the economic growth fell to 6.5 percent in 2011-12. The GDP is estimated to have slowed to a 10 year low of 5 percent in the last fiscal.
"We are not seeing big investments picking up. Big projects have come down, to revive that we need to increase the pace at which projects are completed. As of now, we need to unclog the pipeline and that is the focus," he said.
To accord fast track clearances to large projects, the government in December set up a Cabinet Committee on Investment (CCI), under Prime Minister Manmohan Singh. The CCI has held four meetings so far and has cleared major projects in oil, coal and power sectors.
First Published: Tuesday, April 30, 2013, 19:28