Finance Minister P.Chidambaram said Saturday that the country would finance its Current Account Deficit fully in fiscal 2013-14 without drawing down on its reserves.
Chidambaram said he is confident of economic growth and India would be able to contain the Current Account Deficit.
"The confidence comes from my knowledge of the numbers. The confidence comes from the fact that gold imports have sharply compressed in the months of July, August and September. For example in April, May, June we imported 335 tonnes of gold. In July, August and September, I think the number has come down to about 65 or 70 tonnes. My confidence comes from the fact that exports have picked up briskly and smartly," he said.
The Current Account Deficit grew less than expected in the June quarter and is tipped to ease in coming months as a pick-up in exports and lower gold imports improve the trade balance, offering relief to the battered rupee.
On Tuesday, Economic Affairs Secretary Arvind Mayaram said the country would contain the fiscal deficit at 4.8 % of GDP and added that the government would not have to go beyond the finance ministry's planned market borrowing for the year, and would be able to meet its budgeted revenue target.
The Current Account Deficit (CAD) for the three months through June was USD 21.8 billion, or 4.9 % of gross domestic product, driven by sluggish exports and high gold imports in April and May before the government hiked tariffs on the metal to a record 10 %.
Meanwhile, slowing economic growth has dampened tax revenues, making it tougher for the government to hit its fiscal deficit target of 4.8 % of GDP for the financial year that ends in March.
Economists are now split over whether new Reserve Bank of India (RBI) chief Raghuram Rajan will hike rates again at the central bank's next policy review on October 29.
Many did not anticipate Rajan's focus on curbing inflationary pressures despite growth languishing at a decade-low.
Furthermore, Chidambaram also spoke in detail about the Forward Markets Commission (FMC) issuing show cause notice to FTIL (Financial Technologies (India) Limited).
"FTIL (Financial Technologies (India) Limited) which is a promoter is also under the watch both by the Ministry of Company Affairs and by the two regulators. While NECL (National Spot Exchange Limited) as I have said it is a company. It is not a regulated entity. They are in court. I wish the depositors or the lenders or investors the best. They should exercise and establish their rights under court of law. And those who have committed any errors, I don't know, they will be answerable to those who have put their money in NECL," added Chidambaram.
FMC has alleged that even though borrowers had defaulted on earlier loans, they were allowed to raise money on the NSEL platform.
The FMC on Thursday barred the National Spot Exchange (NSEL) and group firms from auctions of commodities held by the stock exchange after a complaint that firms related to the former Managing Director took part in the bidding process.