India's current account deficit (CAD) will be contained at less than USD 40 billion this financial year, well below the record level in 2012-13, Finance Minister P Chidambaram said today.
"On the CAD, the budget speech says it will be contained below USD 45 billion. Today, 23 days before the end of the year, we can say confidently that the CAD will be contained at below say USD 40 billion," Chidambaram told reporters here.
The CAD, the excess of foreign exchange outflows over inflows, narrowed to $26.9 billion (3.1% of GDP) in the first half (April-September) of 2013-14 from $37.9 billion (4.5% of GDP) in the first half of 2012-13.
The CAD narrowed sharply to $4.2 billion (0.9% of GDP) in Q3 from $31.9 billion (6.5% of GDP) a year earlier as merchandise exports picked up and imports moderated, particularly gold imports, the RBI said on March 5.
Both the government and the Reserve Bank of India had taken steps to restrict gold imports, one of the main causes for the widening CAD in 2012-13.
The government increased customs duty on gold thrice in 2013 to 10% and the RBI imposed a series of curbs on inward shipments of the metal.
Chidambaram also expressed confidence the government would achieve the revised fiscal deficit target of 4.6% in 2013-14.
"We will achieve the fiscal deficit target for the current year. The revised estimate says 4.6% and I am absolutely confident that we will achieve the target," he said. The gap between expenditure and revenue was 4.9% of GDP in the previous financial year.
After taking over as Finance Minister in August 2012, Chidambaram had drawn up a financial consolidation road map to lower the fiscal deficit to 4.8% of GDP in 2013-14, 4.2% in 2014-15 and 3.6% in 2015-16.