Govt cannot assume it will solve current account problem.
According to a RBS report, 'the impact on India's current account deficit should be significant, cumulatively amounting to 1.9 per cent of GDP' provided for the full year FY14 prices for both oil and gold remain at current levels and aggregate volume gold demand remains stable.
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According to the global financial services major, the country's Current Account Deficit, which is the difference between the outflow and inflow of foreign currency, has the potential to 'surprise favourably'.
Gold imports fell to 19.3 tonnes in November from a high of 162 tonnes in May in the wake of a series of curbs by both the government and the Reserve Bank of India.
Rupee hit a record low on Monday, escalating worries about the country's current account deficit and complicating the task of the central bank as it tries to loosen monetary conditions to spur an economic recovery.
It's in the same boat as other emerging markets with current account deficits, but the recent capital-raising measures may help
In the absence of adequate foreign capital flows, it also raises questions about India's foreign exchange reserves buffer and its external vulnerability.
The currency is vulnerable because of a record high current account deficit.
Massive imports by India, of $60 billion and 1,067 tonnes in 2011-12 (up from $40 billion in 2010-11), have contributed in pushing prices of the noble metal to record levels internationally.
Forex dealers said besides selling of the American currency by banks and exporters, easing of norms by Reserve Bank for providing swaps to banks that are borrowing funds overseas and a higher opening in the domestic stock market also buoyed the sentiment.
The 3-month, 6-month and 12-month USD-rupee forecasts are 55, 53 and 52 respectively.
The Indian economy's election-year syndrome cannot be ignored, says A K Bhattacharya.
The measures to reduce the current account deficit should have focused far more on narrowing the trade imbalance, principally through export facilitation and linked FDI, says Nitin Desai.
Are short-term compulsions increasing long-term instability?
In 2013-2014, Finance Minister P Chidambaram said growth would be between 6.1% and 6.7%. In 2014-2015, India, he said, wants growth to be above 7%.
He said while bringing in investments, it is also necessary to manage the high current account deficit.
Instead of hiking duties, he plans to introduce inflation-indexed instruments to help curb a record current account deficit.
Moody's assigns a 'Baa3' rating on India, with a stable outlook.
India's exports jumped 45.76 per cent to $33.28 billion in August on account of healthy growth in segments like engineering, petroleum products, gems and jewellery and chemicals, even as the trade deficit widened to a four-month high of $13.81 billion.
If CAD remains high for 3-4 quarters, central bank may intervene.
Hikes benchmark lending rate by 35 basis points to 6.25 per cent Cuts growth projection for this fiscal to 6.8 per cent from 7 per cent estimated in September Inflation to come down below 6 per cent in March quarter, to average 6.7 per cent this fiscal
The fiscal deficit was 4.9 per cent of GDP in 2012-13.
Of $90 billion remittances that India is expected to receive in 2022, only $27.4 billion has come in the first half of the year.
India's economy is likely to grow by 6.5 per cent in the current and the next financial year, an EY report said, attributing lower than anticipated expansion in the September quarter to fall in private consumption expenditure and gross fixed capital formation. Real GDP growth eased to a seven-quarter low of 5.4 per cent in July-September -- the second quarter of the current 2024-25 fiscal year.
Exports of petroleum products, chemicals, pharmaceuticals, gems and jewellery, and engineering goods registered a positive growth.
The country's exports rose by about 6 per cent to a "record" $447 billion during 2022-23 on account of healthy growth in the outbound shipments of sectors such as petroleum, pharma and chemicals and marine, Commerce and Industry Minister Piyush Goyal said on Thursday. The country's imports also grew by 16.5 per cent to $714 billion in 2022-23 as against $613 billion in 2021-22. He said that the exports of goods and services together scaled "new heights" and has increased by 14 per cent to $770 billion in 2022-23 as against 676 billion in 2021-22.
The deficit increased to $ 57.2 billion or 2.1 per cent of gross domestic product (GDP) in 2018-19 as against 1.8 per cent in the previous year.
'... that it once again shies away from renewing its commitment to strategic divestment,' points out A K Bhattacharya.
An Indian official team is likely to visit Washington next week to iron out differences on certain issues before formally launching negotiations for the proposed India-US bilateral trade agreement (BTA), an official said. The visit, which comes within weeks of a high-level US team visiting India, indicates that the talks for the BTA are gaining momentum.
The government has hiked gold import duty to 15 per cent from 10.75 per cent to check the current account deficit (CAD) and rising import of the yellow metal. The duty changes came into effect on June 30. Earlier, the basic customs duty on gold was 7.5 per cent, now it will be 12.5 per cent.
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Economic Affairs Secretary Arvind Mayaram said India had brought its fiscal deficit down more sharply and quickly than any other country, but managing the current account deficit was more complicated because the government had less control of it.
The Reserve Bank on Wednesday hiked key benchmark policy rate by 25 basis points to 6.5 per cent, citing sticky core inflation.
Every time the Indian economy has faced headwinds due to international developments, the oil sector has played a crucial role, explains A K Bhattacharya.
The finance ministry expects a broad-based moderation in inflationary pressures on the back of an anticipated reduction in food prices as a result of the uptick in summer sowing. The retail inflation rate remained stubbornly clung to the 5 per cent mark in seven of the past eight months. "Core inflation is trending downwards, indicating a broad-based moderation in price pressures... Driven by strong domestic growth and benign global commodity prices, core inflation is declining continuously.
Rajan also said the RBI had reduced the current account deficit "substantially".
Brendan Lynch, the assistant US trade representative for South and Central Asia, will pay a five-day visit to India beginning Tuesday, days before US President Donald Trump's tit-for-tat tariff kicks in. The senior US trade official is expected to hold talks with Commerce Minister Piyush Goyal besides meeting a number of senior Indian officials.
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 commerce ministry is working on different scenarios to assess the possible fallout of reciprocal tariffs to be imposed by the US administration on April 2 on its key trading partners including India, sources said. US President Donald Trump has said that April 2 will be 'Liberation Day' as he plans to announce tariffs or import duties to bring down America's trade deficit, and promote the country's manufacturing.
Decisions taken at home to counter impact of 2008 economic meltdown were among the reasons for depreciation of the Indian currency.
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The rupee had slumped to a record low of 59.9850 rupee to the dollar on Thursday, as the country's record high current account deficit is exacerbating its vulnerability in an emerging market rout.
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