Not fiscal deficit but CAD is biggest concern, says Raghuram Rajan

Pune: India’s record high current account deficit is the country’s biggest concern, Finance Ministry’s Chief Economic Adviser Raghuram Rajan said on Tuesday.

The current account deficit widened to a record high of 5.4 percent of GDP in the September quarter as export growth slowed more sharply than imports, with a similar gap expected in the December quarter likely to prolong weakness in the rupee.

[caption id=“attachment_648727” align=“alignleft” width=“380”] He also said food inflation persisting at a high level was not easy for the central bank to manage. Reuters[/caption]

The current account deficit is expected to stay at record high for the entire 2012-13.

Rajan was speaking at the convocation ceremony of a banking and finance institute in the western city of Pune.

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He also said food inflation persisting at a high level was not easy for the central bank to manage.

India’s annual consumer price inflation accelerated to 10.79 percent in January from the previous month, government data showed.

Reuters