Finance minister P Chidambaram reiterated on Wednesday that India’s current account deficit (CAD) will be contained below $50 billion for FY14, and stressed that the fiscal deficit will be held at 4.8% of gross domestic product for the year, inspite of it having reached 93.9% of the full-year target in the first eight months of the fiscal.
“I have reiterated our commitment to contain fiscal deficit to 4.8% of the GDP in current year and I do so again today. We will then reduce it by 0.6% every year until we reach the target of 3% in FY17,” Chidambaram said.
Speaking at Petrotech 2014 in Greater Noida, FM said he was confident that the economy will gradually get back to high-growth path in the next three years. “As global economy recovers and as new measures take effect, I am confident that Indian economy will also get back step by step to the high-growth path in three years.”
India’s GDP growth slipped to 5% in FY13 and is expected to be at the same level in FY14, the lowest in a decade. Meanwhile, CAD, which soared to the all-time high of $88.2 billion in FY13, was forecast to be around $70 billion in early part of the current fiscal. However, the government took a number of steps, including heavy curbs on gold imports and increasing exports, to curb a bloated CAD. Economic affairs secretary Arvind Mayaram had said on January 9 said that the CAD would be contained at $50 billion.
However, FM warned that oil imports were still high and India needed to work towards energy independence. He said of the total imports of $491 billion in 2012-13, oil imports accounted for $164 billion. “A country like India can not afford such a huge import bill or such a high level of CAD. Therefore, we were constrained to take some hard measures and these measures have helped us contain CAD,” he added.