New Delhi: Despite an increase in the current account deficit in the second quarter of the current fiscal year, Finance Minister Arun Jaitley said on Tuesday that there is no cause for concern as forex reserves are comfortable.
"In the first six months, the CAD (current account deficit) is moderately under control," Mr Jaitley said in the Rajya Sabha during Question Hour.
India's current account deficit narrowed down from 4.7 per cent in 2012-13 to 1.7 per cent in 2013-14 due to a lower trade deficit as a result of modest recovery in exports and a sharp fall in imports, particularly gold imports.
The deficit was brought under control in 2013-14 after government imposed restrictions on import of gold. Following, this in 2014, certain restrictions were withdrawn.
In the July-September quarter, however, the current account deficit rose to 2.1 per cent of GDP, from 1.7 per cent in first quarter. It increased on account of higher trade deficit contributed by deceleration in export growth and increase in imports.
Mr Jaitley said with country's forex reserve was comfortable and the balance of payments under control, there was no cause for concern on the current account deficit front.
Current account deficit is the net difference between inflows and outflows of foreign currencies.
With continued improvement in the outcome and outlook for current account deficit for the year, aided by softening of international prices of crude petroleum, government made the diesel prices market-determined with effect from October 19.
To a question on gold imports, Mr Jaitley said, "If you put in too many restrictions, then the official gold import will come down and unofficial imports will go up."
To another question, Mr Jaitley said till November 27 of the current fiscal year, foreign institutional investors and foreign portfolio investors have made Rs 1,84,757 crore net investments in the country.
During the first six months, investments made by FIIs and FPIs stood at Rs 1,44,053 crore of which Rs 82,810 crore came in the form of debt and the remaining in equity.
To a separate question, he said the Reserve Bank has not received any proposal demanding alternative payment model from radio taxi industry.
"RBI is not contemplating issuance of any circular as alternative authorised payment systems already exists in the country. These payment systems are authorised under Payment and Settlement Systems Act,2007," he said.
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