CAD may come down to $70 bn in 2013-14: Rangarajan

Prime Minister's Economic Advisory Council Chairman C Rangarajan has said India may be able to contain its current account deficit (CAD) to $70 billion, or about 3.7 per cent of the gross domestic product (GDP), in the current financial year because of various steps taken by the government.

CAD - the gap between inflow and outgo of foreign exchange - widened to a record high of $88 billion, or 4.8 per cent of the GDP, for the financial year ended March 31, from $78.2 billion in 2011-2012, about 4.2 per cent of GDP.

"Reducing CAD from $88 billion (2012-13 fiscal) to $70 billion is possible because of various actions taken by the government... Gold imports falling by $10-12 billion itself will be a great relief," Rangarajan said at an event in the national capital on Monday.

He also said the country's economic growth will be around 5.5 per cent in 2013-14.

Finance Minister P Chidambaram had said recently that the government will make all efforts to contain fiscal deficit at 4.8 per cent, and CAD at 3.7 per cent of GDP, about $70 billion in the 2013-14 financial year.

The government has increased duty on import of gold and silver to 10 per cent in a bid to contain the forex outflow, and also announced easier overseas borrowing norms to fetch an additional $11 billion this year to check the burgeoning CAD.

As for the steps to increase capital inflows, financial bodies - IRFC, PFC and IIFCL - will be permitted to raise $4 billion collectively through quasi-sovereign bonds for the infrastructure sector.

Chidambaram had also said that PSU oil companies would be permitted to raise additional External Commercial Borrowings (ECBs) to the tune of $4 billion.

He had further said the liberalisation of the ECB norms and non-resident deposit schemes (NRE/FCNR) would fetch $2 billion and $1 billion respectively.

With inputs from PTI