Current a/c deficit expected to be contained under 2%

MUMBAI: India's current account deficit is expected to be contained at well under two per cent of the GDP this fiscal, RBI Deputy Governor Rakesh Mohan said.

"The current account deficit is expected to be comfortably financed in the remaining part of this year (fiscal)," he said at the 9th Global Conference of Actuaries here.

He said that merchandise export growth had resumed strongly after a dip in October. "At the same time, imports of POL increased sizeably as in the previous year, but reflecting a sharp increase in import volume in the current year," he said.

Non-oil import growth, which remained subdued in early FY'07 had picked up during Q3 this fiscal, in consonance with industrial activity, he said.

Pointing to reports of a substantial pick-up in bullion imports in October-November 2006, Mohan said "while the merchandise trade deficit has consequently widened, the sustained surplus on account of invisibles" was expected to contain the current account deficit at well under two per cent of the GDP this fiscal.

Capital flows into the country had also recovered from the moderation witnessed in May-June 2006 period, he said.