The Union Finance Minister P Chidambaram has recently told the Parliament that his Ministry has taken several measures to ensure the Current Account Deficit (CAD) be fully and safely financed in the current year. If the CAD is contained at $70.0 billion, it will amount to 3.7 per cent of GDP (as against 4.8 per cent in 2012-13), Chidambaram said.
Following are the measures the government has taken as per the Minister. They are: i) Compression in import of gold and silver.
(ii) Compression in demand for oil.
(iii) Compression in certain imports (non-essential nature) The government will also take measures to enhance the capital inflows into India and these will include: Public sector Financial Institutions to raise quasi-sovereign bonds to finance long term infrastructure. Liberalising ECB guidelines. PSU oil companies to raise additional funds through ECBs and trade finance.
(iv) Liberalising NRE/FCNR deposit schemes
As a result of these measures the government expect that the CAD will be contained at $70.0 billion while the inflows will increase to a level that will be sufficient to finance the CAD. We also expect that, like last year, there will be a small accretion to reserves at the end of the current year.
If the CAD is contained at $70.0 billion, it will amount to 3.7 per cent of GDP (as against 4.8 per cent in 2012-13), Chidambaram said.
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