Current Account Deficit (CAD) is likely to come down below 3 per cent of GDP in the current fiscal on the back of measures taken by Government, PMEAC Chairman C Rangarajan said on Friday.
He exuded confidence that the Indian economy will grow at 5.3 per cent in 2013-14.
“In the light of steps that have been taken the CAD will certainly come down below 3 per cent of the GDP in the current year and it will not be difficult to finance this level of CAD,” he said at the India Economic Conclave organised by ET Now.
The CAD, which is the difference between inflow and outflow of foreign exchange, touched a record high of $88.2 billion or 4.8 per cent of GDP in 2012-13 on account of higher gold and oil import.
The Government has taken several steps, including hike in gold import duty to 10 per cent and restrictions on import of gold bars and medallions, to restrict CAD. It has also taken measures to boost exports, taking advantage of depreciating rupee.
It hopes that CAD will come down substantially to $56 billion or less.
“Going over the medium term we should contain the CAD somewhere around 2.5 percent of GDP and that will enable us to get capital flows in the normal fashion and that will not put the pressure on the rupee,” Rangarajan said.
A high CAD puts pressure on the rupee, which had touched a low of 68.85 to a dollar in August.