Encouraged by surging exports, the Planning Commission has said as per its latest assessment, India's current account deficit will definitely be less than 3 per cent of GDP in the current fiscal year (FY14).
"I think that the current assessment is that it is definitely less than 3 per cent. That is our assessment," Planning Commission Deputy Chairman Montek Singh Ahluwalia told reporters in Delhi on Thursday.
The current account deficit, which is the difference between outflow and inflow of foreign exchange, touched an all-time high of $88.2 billion, or 4.8 per cent of GDP, last fiscal year (FY13).
Earlier, the government had projected the deficit at $70 billion for FY14, but was revised downwards to $60 billion by Finance Minister P Chidambaram on the back of declining gold imports and recovery in exports.
Reserve Bank of India (RBI) Governor Raghuram Rajan said on Wednesday that current account deficit will be at $56 billion in FY14.
"Our estimate now is that CAD this year will be $56 billion, less than 3 per cent of GDP and $32 billion less than last year. Of course, some of that compression comes of our strong measures to curb gold import," Mr Rajan had said at a press conference on Wednesday. (Read more)
Recovery in global markets helped India post a 13.47 per cent increase in exports, the highest growth in the last two years, at $27.2 billion in October.
Besides, during the first seven months of this fiscal year (FY14), gold and silver imports declined by 12.86 per cent to $24 billion from $28 billion in the corresponding period last year.
"I believe that Governor of the Reserve Bank has said, (it would be) 2.7 per cent or something like that. Frankly, between 4.8 per cent CAD last year and 2.7 per cent this year, on that front the news is unambiguously good," Mr Ahluwalia said.
"We are not living in a world of fixed exchange rate. So you should not get nervous if currency moves a little bit. People know that this is the world of flexible currency. So it is not really news, one way or the other way."
The rupee had declined to all time low of 68.85 on August 28. It has, however, strengthened from that level.
On Thursday, the rupee rose by 19 paise, or 0.30 per cent, to end at 63.11 against dollar. (Read more)
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