FY14 current account gap narrows to 1.7 pc of GDP

Tags: News
Helped by a sharp moderation in imports, especially of gold, India's current account deficit (CAD) sharply narrowed to 1.7 per cent of GDP, or $ 32.4 billion, in FY'14 from 4.7 per cent in FY'13, Reserve Bank said today.

"Contraction in the trade deficit, coupled with a rise in net invisibles' receipts, resulted in a reduction of the CAD to $ 32.4 billion, or 1.7 per cent of GDP, from $ 87.8 billion, or 4.7 per cent of GDP in 2012-13," it said.

For the March quarter, CAD, a measure of the inflow and outflow of foreign currency, stood at $ 1.2 billion, or 0.2 per cent of GDP, as against $ 18.1 billion, or 3.6 per cent of GDP, in the same period previous fiscal, the RBI said.

The highest ever CAD reported last fiscal had led to a slew of problems, including a heavy drop in the rupee, which touched an all-time high of 68.85 against dollar last August.

The high CAD had led to a series of unconventional steps by the Government and the RBI to curb imports, especially on gold which have paid off handsomely.

On trade deficit front, RBI said the recovery in exports and the import moderation led to a sharp recovery in the gap to $ 147.6 billion in FY14 as against the $ 195.7 billion in FY13.

The net inflows declined to $ 48.8 billion during the just-concluded fiscal, as against $ 89 billion in the previous fiscal, the RBI said, attributing this to lower foreign direct investment flows, net repayment of loans and trade credit and advances.

During the fiscal 2013-14, contribution of services in the balance of payments (BoP) increased to 12.3 per cent at $ 73 billion, up from the $ 64.9 billion.

In the final quarter of FY14, gold imports were down by nearly two-thirds to $ 5.3 billion, down from $ 15.8 billion in the previous fiscal, the apex bank said.

Trade deficit for the quarter narrowed by about a third to $ 30.7 billion from $ 45.6 billion in the year-ago period.

Ever since special measures were introduced by RBI in tandem with Ministries of Finance and Commerce, the rupee has reclaimed a significant portion of the lost ground against US dollar. The Indian unit is now trading under 59 level against the US currency and the RBI has turned to buying dollars to reduce volatility.

Post new comment

E-mail ID will not be published
CAPTCHA
This question is for testing whether you are a human visitor and to prevent automated spam submissions.

EDITORIAL OF THE DAY

  • India’s festivals teach us to share our wealth and joy

    India is an aporia in its own true sense.

FC NEWSLETTER

Stay informed on our latest news!

INTERVIEWS

GV Nageswara Rao

MD & CEO, IDBI Federal Life

Timothy Moe

Goldman Sachs

Chander Mohan Sethi

CMD, Reckitt Benckiser India

COLUMNIST

Tushar Gandhi

Sustainable model for rural sanitation

Prime minister Narendra Modi has promised to build a toilet ...

Zehra Naqvi

How smells evoke strong memories

Remember that time when a passing fragrance transported you to ...

Dharmendra Khandal

Indian zoos need a fresh approach

Recently, when a man jumped in a tiger trench of ...

INTERVIEWS

William D. Green

Chairman & CEO, Accenture