RBI Governor says current account deficit comfortable despite widening

Reserve Bank of India (RBI) Governor Raghuram Rajan has said the central bank is comfortable with the current account deficit (CAD) even after it widened in the July-September quarter.

Still, Rajan, speaking at a news conference after the central bank's board meeting, said risks remain to the CAD even though he was not apprehensive about it.

CAD widened to 2.1 per cent of gross domestic product in the July-September quarter, higher than both the previous quarter and a year earlier, showed data released by RBI on Monday.

Turning to the economy, Rajan said an interest rate cut won't by itself lead to higher economic growth, although he noted it would have an impact.

The RBI Governor also said the central bank was in discussions with the government about reviewing priority sector lending norms for foreign banks operating in India.

On raising limits on foreign investments in government bonds, Rajan said it would look at it at an appropriate time and expand it steadily.

(Reuters)