Lower imports has helped narrow trade deficit to $9.92 billion in January from $18.7 billion.
Encouraged by foreign exchange reserves touching record levels, the Reserve Bank on Tuesday doubled the annual overseas investment ceiling for individuals to $2,50,000.
The fall would have been much more pronounced, had there not been sustained capital inflows worth of over $100 million in equities, forex dealers said.
Focus should be on integrating India into regional trade blocs and helping professional services transcend borders.
Earlier, finance ministry officials had said sovereign bonds could address the financing problems of the CAD and the infrastructure sector.
Giving more freedom to individuals travelling abroad, they may soon be allowed to spend $2 lakh overseas in a year as against the present ceiling of $75,000.
The central bank also asserted that the country is ready for the tapering of the US Federal Reserve's bond purchases.
India's Current Account Deficit rose to a record 6.7 per cent in the quarter ended December of 2012-13.
The West Bengal state government has delayed project approvals. And now, the IT giants may look at other states as the centre is thinking of giving sops to SEZs
Strength in dollar against some other currencies overseas weighed on the rupee
A high import of the metal is putting pressure on current account deficit.
Expectations that various sectors and the common man is eyeing in this budget.
Both the government as well as the RBI took a series of steps to curb imports of gold and other non-essential items in addition to increase foreign exchange inflows.
In Jan the country raised the import tax on the yellow metal by 2 percentage points.
Fiscal pressure for the Indian economy is gradually rising, suggested analysts at Jefferies in a recent note, as oil prices (Brent) - which are close to the $100 a barrel mark - continue to climb ahead of a busy election calendar. They added that the sharp rally in the equity markets during the last few months has made valuations costly. As a result, Jefferies expects the Indian markets to remain choppy in the near term.
Traders had accumulated stocks when the FM hinted of a duty hike.
Every 10 per cent rise in crude oil price will shave off around 0.2 percentage point (pp) from India's GDP growth and widen the current account by 0.3 per cent, says Nomura.
India's economic condition is just a notch above that of Greece. The next phase could be of a "sovereign default" similar to Greece, said Arun Jaitley, Leader of Opposition in Rajya Sabha.
Speaking at a roadshow in Frankfurt on investment opportunities in India on Monday, the Minister said the economy was on the right path to achieve growth levels recorded during 2004-2008.
Some are eying the competitive markets abroad.
In august last year, the government had raised import duty on gold and silver to 10 per cent to curb the surging imports and burgeoning CAD.
Declining value of the rupee, widening Current Account Deficit (CAD) and the impact of likely tapering of US bond purchases are some of the key issues which will keep Raghuram Rajan busy.
'We see mid-and small-caps as a real pot of gold.' 'From a 10-15 years perspective, mid-and small-cap are likely to outperform the larger index, as they have done in the past.'
Currency market participants do not expect the rupee to slide immediately but feel a sharp rise is unlikely because of month-end dollar demand from importers.
The 30-share Sensex ended up 203.97 points to trade at 18,516.91 and the 50-share Nifty rose 63.30 points at 5,471.75 levels.
The broader markets gained with mid-caps and small-caps rising 0.7-0.9 per cent on the BSE.
So what are the reasons for the bloodbath in the markets? And how it affects you.
The 30-share Sensex ended lower by 291 points to 18,308 and the 50-share Nifty dropped 93 points to 5,415.
The 30-share Sensex ended lower by 291 points to 18,308 and the 50-share Nifty dropped 93 points to 5,415.
"We are one of the very few emerging economies in the world that has a current account deficit. That is because nobody wants to start an industry in India," says Dilip Kapur, Founder, Hidesign.
IThe fiscal deficit target for 2020-2021 was originally set at 3.5 per cent of GDP. But the government's revenues have collapsed and its expenditure burden will only increase over the Budget estimates.' With the government having already planned for an additional borrowing of over Rs 4 trillion, the fiscal deficit for the current year would be much higher than the Budget estimate, notes A K Bhattacharya.
The move comes in the backdrop of a slowdown in the foreign direct investments and its impact on the current account deficit.
The upsurge was further supported by a firming global trend.
The Union Budget for 2011-12 comes at a critical juncture for the economy -- high inflation, tight liquidity, elevated fiscal and current account deficits, and a slowdown in the reform process have taken away the sheen from the India growth story.
India's CAD had touched a record high of 4.2 per cent of GDP in 2011-12, on the back of a wider trade gap and lower capital inflows.
Recent measures by the Reserve Bank of India and the Securities and Exchange Board of India are being seen by observers as an attempt to reverse the inexorable decline of the rupee.
'Why do we make finance ministers go into contortions, to tell us that near 6% is 3.5%?' 'Why not encourage more open and full accounting so that the country knows the real picture,' asks T N Ninan.
Finance ministry tells PM fiscal deficit target will be met, capex expenditure won't be cut and GDP growth will surpass 7.5%.
The central bank said the restrictions would also apply to imports of gold which do not have a fixed price.
The rupee should be allowed to find its own level, says analyst Anil Bhansali.
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