The current account deficit (CAD), which had touched a record high of 4.2 per cent last fiscal, is likely to moderate to 3.1 per cent of GDP in the current financial year on the back of import moderation and the
strengthening rupee, says a note by rating agency Crisil today.
"Going forward, we expect further moderation in imports due to slower growth and some appreciation in the rupee. This is likely to bring the CAD down to around 3.1 per cent of GDP for 2012-13 with the rupee expected around 53 per dollar by the end of March," the report said.
The CAD, which is the difference between the forex earned and expended, has come down to 3.9 per cent in the first quarter of this fiscal from a high 4.5 per cent in the Q4 of last fiscal on the back of slowing imports.
In absolute terms, the CAD came down to USD 16.6 billion in first quarter of this fiscal against USD 21.8
billion in Q4 of FY12.
"Among the major components of the current account, trade deficit fell by 5.6 per cent and surplus on invisibles also fell by 5.6 per cent y-o-y. The invisibles surplus was able to finance only 61 per cent of the trade deficit," the report said.
As per the report, imports saw a reduction of 3.6 per cent to USD 119.2 billion in the first quarter as against USD 123.7 billion a year ago.
Driven by a massive spike in oil and gold imports, which pushed up the trade deficit to historic high, the
current account deficit hit all-time high of 4.2 per cent of GDP in FY12 at USD 78.2 billion. This was the highest ever CAD both in percentage and in absolute terms. In FY11, the CAD was only USD 46 billion or 2.7 per cent of GDP.
Referring to balance of payment (BoP) turning positive, the report said, "Lower current account deficit and
stable capital inflows in Q1 of FY13 as against Q4 of FY12 eased the pressure on BoP and pulled it out of the negative zone."
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