The current account deficit is likely to be at 1.7% in 2014-15 and will narrow further to less than1% for the next two years, according to a report.
The current account deficit is likely to be at 1.7% in 2014-15 and will narrow further to less than1% for the next two years, according to a report.
"Going forward, while exports outlook remain weak, we expect CAD to narrow from 1.7% of GDP in last fiscal year to less than 1% of GDP in the current fiscal and the next on account of soft commodity prices and contained gold demand," Citi said in a report here in Mumbai.
A report by domestic rating agency, Crisil said the country's current account deficit is 1.1%. The export touched US $310.5 billion last fiscal, which was down 1.2% from US $314.1 billion in the previous fiscal and 7.5% lower than the government's estimate of US $340 billion for the year. The fall in exports was mainly on account of 11% decline in petroleum exports following a massive correction in crude prices.
"Even after accounting for 11.2% decline in oil exports - from US $ 63.1 to US $56.1 billion, due to lower oil prices in FY15, growth in non-oil exports was a mere 1.2% at US $ 254.3 billion from US $251.3 billion," Crisil said in a report. During the year, imports also declined 0.59% to US $447.5 billion from US $ 450.2 billion in FY14.
Decline in imports allowed merchandise trade deficit to rise only marginally to US $137 billion in FY15 as against US $135.8 billion in FY14. Services trade surplus during April-February FY15 improved to US $68.3 billion from US $ 66.6 billion in the year-ago period suggesting that current account deficit would be kept under check.
The Crisil report further said muted growth in trade at the international level may be a hindrance for the country in reaching the US $900 billion export target, as envisaged in the new Foreign Trade Policy, by FY20. "India's new Foreign Trade Policy which aims to take total exports to US $900 billion by 2019-20 may find the task difficult amidst weak global trade growth prospects," it said.
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