The government would also take steps to promote exports and restrict non-essential imports, said Jaitley
CAD, which is the difference between outflow and inflow of foreign currency, touched a historic high of 6.7 per cent in the third quarter.
The Prime Ministry's Economic Advisory Council Chairman also said fiscal deficit is a concern too and suggested raising domestic oil prices to restrict it to the budget target of 4.8 per cent of the gross domestic product in this fiscal.
Finance Minister P Chidambaram on said that financing current account deficit (CAD) year after year is a challenge and the only way to deal with the problem is by increasing exports.
India's balance of payments in negative territory.
When the outflows are more than the inflows, a deficit occurs in the current account of the nation, which is widely known as the Current Account Deficit.
Leading brokerages Nomura and Barclays on said current account deficit, which unexpectedly improved to 4.8 per cent in 2012-13, but still at a historic high, could moderate further this fiscal on slowing gold imports and cheaper commodities.
Gold imports had totalled 335.1 tonne in the April-June quarter, but have declined to 58.37 in the second quarter (up to September 25).
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As per the latest data, India's CAD sharply narrowed to 1.7 per cent of the gross domestic product or $32.4 billion in 2013-14 from a record high of 4.7 per cent in FY'13.
Moody's assigns 'Baa3' rating on India, with a stable outlook.
The country's current account deficit is likely to decline to 1.1-1.2 per cent of the gross domestic product in the third quarter, say rating agencies.
The RBI left key policy rates unchanged and cut the GDP growth estimate for this fiscal to 5.5 per cent from 5.7 per cent.
India recorded a current account surplus of $5.7 billion or 0.6 per cent of GDP in the March quarter, the Reserve Bank of India said on Monday. This is the first time in ten quarters that the crucial metric of the country's external strength has turned into surplus mode. In the year-ago period, the current account deficit stood at $1.3 billion or 0.2 per cent of GDP, and the same was $8.7 billion or 1 per cent of GDP in the preceding quarter ending December 2023.
The current account deficit is the difference between inflow and outflow of foreign exchange.
Gold imports, which peaked at 162 tonnes in May, came down to 19.3 tonnes in November.
The central bank is of the view that rise in external debt a concern but rating outlook revision reassuring.
Expressing serious concerns over the current account deficit touching a record 4.8 per cent in 2012-13, India Inc on Thursday asked the government to take all policy measures, including boosting exports and foreign exchange inflows to bring down CAD.
The government is committed to restrict the fiscal deficit at 3.4 per cent of GDP as envisaged in the Budget.
The government has hiked import duty on gold three times in a year and recently raised it by 2 per cent to 8 per cent to curb demand.
According to SBI Ecowrap, every $10/barrel increase in oil price results in additional import bill of $8 billion.
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Exports increased by 10.6 per cent in the first quarter of 2014-15 to $81.7 billion. Imports moderated by 6.5 per cent to $116.4 billion. The CAD, which is the difference between the inflow and outflow of foreign currency, had touched a record high of $ 87.8 billion (4.8 per cent) in 2012-13 fiscal mainly on account of steep increase in gold imports.
Fiscal deficit in first half of FY19 has already reached 95.3 per cent of full-year budget estimates.
Rajan says, this is a time where countries should be focusing on getting the macro stability in order
He said while bringing in investments, it is also necessary to manage the high current account deficit.
India's current account deficit which narrowed in the second quarter of this fiscal, however, is likely to widen during the second half of FY 2013-14 as seasonal demand bring in more imports, an HSBC report says.
It added that industrial output is on decline due to poor demand and lack of infrastructure.
The largest component in computing CAD is trade deficit. India's trade deficit widened to $13.35 billion in October as exports contracted 5.04 per cent and gold imports surged
With the prediction of an above normal monsoon in 2024, the government is expecting food prices to come down, the finance ministry's monthly economic report for March has said. The report, released on Thursday, said robust foreign inflows and comfortable trade deficits were expected to keep the rupee within a comfortable range. "Further easing of food prices is on the anvil as IMD (India Meteorological Department) has predicted above-normal rainfall during the monsoon season, which is likely to lead to higher production, assuming good spatial and temporal distribution of the rainfall," the monthly report, released by the Department of Economic Affairs, said.
India's current account deficit (CAD) is likely to ease to 4.4 per cent of the GDP in the current fiscal year on lower oil and gold prices, Bank of America Merrill Lynch (BofA-ML)said in a research note.
India's gold imports, which have a bearing on the country's current account deficit (CAD), increased 26.7 per cent to $35.95 billion during the April-December of this fiscal due to healthy demand, according to government data. The imports stood at $28.4 billion during the same period a year ago. In December 2023, imports of the precious metal jumped by 156.5 per cent to $3 billion, as per the data released by the commerce ministry.
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Narrowing of the current account deficit will help arrest depreciation of the rupee and ease inflation concerns, industry groups said.
India's current account deficit narrowed sharply to just $300 million
RBI Governor Rajan on Wednesday said significant progress made in curbing current account deficit.
According to the report by the global financial services major, the FY2013-14 CAD is expected to be within $36 billion or 2 per cent of GDP, and this fiscal year CAD is likely to be slightly higher but contained at 2.3 per cent of GDP.
The CAD has been narrowing since 2012 to an estimated 1.6% of GDP in 2014
The country's current account deficit widened to 4.4 per cent of the GDP in the quarter ended September, from 2.2 per cent GDP during the April-June period, due to higher trade gap, as per data released by the Reserve Bank on Thursday. "India's current account balance recorded a deficit of $36.4 billion (4.4 per cent of GDP) in Q2:2022-23, up from $18.2 billion (2.2 per cent of GDP) in Q1:2022-23 and a deficit of $9.7 billion (1.3 per cent of GDP) a year ago [i.e., Q2:2021-22]," the RBI said.
'Gurashman's death is being treated as unexpected, and while there is nothing to suggest it was suspicious, we will ensure our investigation is as thorough as possible to confirm this'
Huge gold imports have put pressure on the country's CAD, which in turn is affecting the value of rupee.
The Reserve Bank has told the International Monetary Fund (IMF) that the objective of frequent interventions in the forex market is to curb excessive volatility, dismissing the Fund's rationale for reclassifying India's exchange rate regime. The IMF, following the Article IV consultation with the Indian authorities, reclassified the status of the exchange rate regime to "stabilised arrangement" from "floating" for period between December 2022 to October 2023. India's Executive Director at IMF K V Subramanian and Senior Advisors Sanjay Kumar Hansda and Anand Singh questioned the selection period adopted by the Fund for analysis and also reclassification of the country's exchange rate regime.
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