Buoyed by the current account nearing surplus for the first time in nine years, the government today said reduction in CAD is a sign of economic health and it is committed to sticking to its targets.
The current account deficit (CAD) -- the broadest measure of trade and investment -- at $0.3 billion in January-March compared with a deficit of $7.1 billion in the previous quarter. India last had a current account surplus of $4.2 billion in the three months to March 2007.
"CAD is certainly better than last year. CAD reducing is a healthy sign. It is one of the major macro indicators of economic health of the country. Certainly, it's a good number," Finance Secretary Ashok lavasa told the news agency.
The current account deficit for the full 2015-16 came down to $22.1 billion (1.1 per cent of GDP), from $26.8 billion (1.3 per cent) in 2014-15.
CAD -- the difference between inflow and outflow of foreign exchange -- in 2015-16 has improved on the back of increase in foreign direct investment and contraction in trade deficit. lower oil prices and a drop in gold imports have helped CAD.
Asked if the Government is confident of meeting the Budget targets, lavasa said: "We are certainly working in that direction. Whatever macro economic numbers are there, we are certainly working towards maintaining that."
In 2016-17 Budget, Finance Minister Arun Jaitley had pegged the fiscal deficit at 3.5 per cent of GDP, down from 3.9 per cent in 2015-16.
Total Government expenditure in the current fiscal would be Rs19.78 lakh crore. Of this, Rs5.50 lakh crore would go towards Plan expenditure and another Rs14.28 lakh crore towards non-Plan expenditure.
Indian economy has gained traction during the last two years and extended its lead as the world's fastest-growing large economy with a GDP growth of 7.6 per cent in 2015-16. At 7.9 per cent, it has even surpassed China's 6.7 per cent growth in the March quarter - the Communist country's slowest expansion in seven years.