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Current Account Deficit Narrows to 1.7 % of GDP

May 27, 2014 by Admin Leave a Comment

  • India’s current account deficit(CAD) for the January-March period narrowed to $1.2 billion (0.2 % of GDP) from $18.1 billion (3.6 % of GDP) in the same period last   year,was also lower than $4.2 billion (0.9 % of GDP) in October-December 2013-14.
  • According to Reserve Bank of India (RBI) the lower CAD was on account of a decline in the trade deficit as decline in imports was sharper than exports.
  • As per preliminary data released by RBI on India’s balance of payments(BoP), merchandise exports declined by 1.3 % to $ 83.7 billion for the fourth quarter of 2013  -14,against an increase of 5.9 % in fourth quarter of 2012-13.
  • Declining trend in merchandise imports at $114.30 billion by 12.3 % in the fourth quarter 2013-14 led by a steep drop in gold imports, which amounted to $ 5.30   billion, lower than $15.80 billion in the fourth quarter of 2012-13.
  • The merchandise trade deficit contracted by about 33 % to $30.70 billion 2013-14 from $ 45.60 billion in the corresponding quarter a year ago.
  • BoP during 2013-14 export recovery and moderation in imports led to a drop in the trade deficit to $147.60 billion in 2013-14 from $195.70 billion in 2012-13.
  • Contraction in the trade deficit resulted in a reduction of CAD to $32.40 billion (1.7 % of GDP) in 2013-14 from $87.80 billion (4.7 % of GDP) in 2012-13.
  • The RBI said:
    • The net inflows under the capital and financial account declined to $48.80 billion in 2013-14 from $89 billion in corresponding  period of 2012-13 owing to lower net FDI and portfolio flows, net repayment of loans and trade credit and advances.
    • On BoP basis, foreign exchange reserves increased by $15.50 billion during 2013-14 as compared with $3.80 billion in 2012-13.
  • Read at : http://www.thehindu.com/todays-paper/tp-business/current-account-deficit-narrows-to-17-of-gdp/article6051266.ece
Exams Perspective:
  1. CAD
  2. Foreign Exchange
  3. FDI
  4. FII
  5. GDP
  6. Bullion
  7. Fiscal Deficit
  8. Balance of Payments (BoP)

Filed Under: Current Affairs, Economy

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