CAD may come down to $70 billion in 2013-14: C Rangarajan

NEW DELHI: India may be able to contain its current account deficit (CAD) to $ 70 billion, about 3.7 per cent of GDP, in the current fiscal because of various steps taken by the government, Prime Minister's Economic Advisory Council chairman C Rangarajan said today.

He also said that the country's economic growth will be around 5.5 per cent in the 2013-14 fiscal.

"Reducing CAD from $ 88 billion (2012-13 fiscal) to 70 billion is possible because of various actions taken by the government... Gold imports falling by $ 10-12 billion itself will be a great relief," Rangarajan said at an event here.

India's CAD -- the gap between inflow and outgo of foreign exchange -- widened to a record high of $ 88 billion or 4.8 per cent of the GDP for the fiscal ended March 31, from $ 78.2 billion in 2011-2012, about 4.2 per cent of the Gross Domestic Product.

Finance Minister P Chidambaram had said recently that the government will make all efforts to contain fiscal deficit at 4.8 per cent, and CAD at 3.7 per cent of GDP, about $ 70 billion in the 2013-14 financial year.

The government has increased duty on import of gold and silver to 10 per cent in a bid to contain the forex outflow, and also announced a slew of measures including easier overseas borrowing norms to fetch an additional $ 11 billion this fiscal to check the burgeoning CAD.

As for the steps to increase capital inflows, financial bodies - IRFC, PFC and IIFCL - will be permitted to raise $ 4 billion collectively through quasi-sovereign bonds for the infrastructure sector.

Chidambaram had also said that PSU oil companies would be permitted to raise additional External Commercial Borrowings (ECBs) to the tune of $ 4 billion.

He had further said the liberalisation of the ECB norms and non-resident deposit schemes (NRE/FCNR) would fetch $ 2 billion and $ 1 billion respectively.