CAD will be around 4.2% in 2012-13, says Rangarajan

New Delhi: The current account deficit is likely to be around the last year’s level of 4.2 percent of the GDP for 2012-13 fiscal, Prime Minister’s Economic Advisor Council Chairman C Rangarajan said today.

“I think CAD as a year whole in current fiscal may be in the same region as it was last year which was 4.2 percent of GDP,” Rangarajan said. Current account deficit (CAD), which represents the difference between exports and imports after considering cash remittances and payment, widened to a record high of 5.4 percent of GDP, or $22.3 billion, in July-September quarter.

[caption id=“attachment_576829” align=“alignleft” width=“380”]  On the rupee movement, he said when there is a mismatch between capital flows and current account deficit. Reuters[/caption]

“The export sector will be much better in the second half of the year (fiscal) than the first half,” Rangarajan said. He said that in the past capital inflows through FDI, FII, external commercial borrowings or NRI deposits have been adequate to cover the current account deficit. “I believe for the year as whole capital inflows will be adequate to cover CAD of the current fiscal year,” he added.

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On the rupee movement, he said when there is a mismatch between capital flows and current account deficit, it shows pressure on the currency. “As a year, capital inflows would be adequate to cover the current account deficit. And therefore, I do not expect the rupee to change much,” Rangarajan said.

PTI