Chidambaram confident of containing current account deficit below $60 bn

Finance Minister P Chidambaram on Tuesday exuded confidence that India's current account deficit will be contained below USD 60 billion this financial year as against an earlier estimate of $70 billion.

"We think we can peg it at $60 billion or below. I am confident that we can do even slightly better than $60 billion," he told CNBC Awaaz.

The CAD, the difference between the inflow and outflow of foreign exchange, had touched an all-time high of $88.2 billion, or 4.8 per cent of gross domestic product, in the last fiscal.

The deficit for April-June was at $21.8 billion or 4.9 per cent of GDP.

High gold imports was one of the main reasons that pushed CAD to a record high in the previous financial year.

However, various curbs put in by both Reserve Bank of India and the Centre had helped

in containing gold imports this fiscal.

On impact of the US Federal Reserve's gradual stimulus withdrawal, Chidambaram said the tapering will happen, but both the markets as well as the government are prepared to deal with it.

"We now know it (tapering) will happen. . .it will happen perhaps in January or February, today they say it will happen in March. . .Market and government are now prepared for this, in the sense we know it will happen. . .

"Therefore, we need to strengthen the fundamentals of the economy, what the (RBI) Governor said bullet proof balance sheet, which means we will contain CAD, we will contain fiscal deficit, improve the revenues, contain expenditure, take steps to prevent excessive speculations on the currency. . .," he said.

The Finance Minister further said number of measures are being taken so that when tapering happens, "markets won't be taken by surprise, we won't be taken by surprise and whatever impact it will be a minimal impact".