| Date: |
13-02-2014 |
| Subject: |
India trade deficit to be $144.9 bn at FY 14, CAD at $36.8 bn: Citigroup |
|
India's trade deficit for the current financial year is likely to be contained at USD 144.9 billion, helping to narrow the current account deficit to USD 36.8 billion, a Citigroup report says.
The improvement in the current account deficit (CAD) is largely due to the narrowing of the trade deficit and the success of the FCNR deposit scheme, according to the financial services major.
The Reserve Bank of India had in September offered special concessional windows for swapping foreign currency non-resident (FCNR) deposits and for overseas borrowings by banks. The two swap windows mobilised USD 34 billion, the RBI said on December 2.
"Taking into account the sharper-than-expected fall in 'non-oil/non-gold' imports, we estimate the trade deficit narrowing to USD 144.9 billion vs USD 194 billion last year, Citigroup said. It added that in FY14 "we expect the CAD to come in at USD 36.8 billion or 2 per cent of GDP."
In the next financial year (2014-15), the trade deficit is expected to rise marginally to USD 156 billion and the CAD may reach USD 46.7 billion, or 2.3 per cent of GDP.
According to a finance ministry official, the CAD is expected at USD 45 billion in the current financial year. The Reserve Bank last month projected the CAD at less than USD 50 billion, or 2.5 per cent of GDP. The gap in 2012-13 was USD 88.2 billion, or 4.8 per cent of GDP.
Citigroup said the narrowing of the trade deficit in FY14 cannot be attributed only to restrictions on gold imports and that it is more "broad-based."
Exports have risen, led by petro products, textiles and transport equipment, while imports, apart from gold, have also declined due to lower inward shipments of capital goods, the report said.
Gold and silver imports declined 77 per cent to USD 1.72 billion in January, mainly due to curbs imposed by the government on inbound shipments of the precious metal, which are aimed at narrowing the current account deficit.
India's exports grew 3.79 per cent to USD 26.7 billion in January and the trade deficit narrowed sharply to USD 9.92
Source : financialexpress.com
|