The Finance Ministry on Wednesday said that it sees current account deficit (CAD) easing to 5 per cent in the January- March quarter, according to reports.
The current account deficit in the December quarter had swelled to 6.7 per cent of the gross domestic product (GDP), way above the Reserve Bank of India's (RBI) comfort level which stands at 2.5 per cent.
The CAD for 2012-13 is seen at 4.9- 5 per cent, the Finance Ministry said according to the reports. The ministry sees CAD for the current fiscal slightly above 4 per cent.
The current account deficit in 2011-12 stood at 4.5 per cent of the GDP.
CAD is the difference between the outflow and inflow of foreign currency.
The Finance Ministry has said the balance of payments is improving.
The RBI that meets next Monday on June 17 to decide monetary policy has said it will factor in CAD while deciding whether to cut key rates. The RBI has maintained that CAD remains above its comfort level.
The RBI since January has already cut repo- rate-the rate at which it lends short-term money to banks-three times bringing it down to 7.25 per cent, the lowest since May 2011.
After the last rate cut by 0.25 per cent, the RBI had said, there is very little room for further easing.
Recently, Finance Minister P Chidambaram had urged banks to pass on the rate cut benefit to customers by cutting lending rates. No bank has cut lending rates, since RBI cut repo rate three times.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
