India's Dangerous Zone: Current account deficit at all-time high of 6.7%

[neehar]

India import 800tons gold every year, worth more than 41billion$, every year, so this part should be take out

yes gold is an important factor.also some more like coal and fertilizers which we can manage at home must be concentrated on

 

[neehar]

Larger economies are slow to move in either direction. As of now CAD is widening with greater rate than before.

A question from economists in the forum:

If India's Net Imports are greater than Net Exports, how is Indian Economy growing at "5.6%" ?

an excellent question i must say..simple even though the trade deficit exists in case of india the rise in gdp can be mainly owed to two factors..foreign investments in india.foreign remittances to india including the indian companies abroad..our govt is taking measures to double our exports by the next 3 years i.e to $500 billion.if that happens we'll be in top ten exporters of the world which would take care of the CAD,trade deficit and exchange value of rupee.currently our CAD is at 5.4% and our forex reserves at about $300 billions..

 

[IND151]

i hope people can understand simple english here.the article says

"India's current account deficit (CAD) touched a record high of 6.7% of GDP in the October-December quarter, mainly on account of widening trade gap."

that just belongs to october december quarter.heres the latest

CAD to show improvement in fourth quarter: Rangarajan - The Hindu


Having hit a record 6.7 per cent of GDP in December quarter, India’s current account deficit is expected to show some improvement in the last quarter of this fiscal on account of likely uptick in exports, Prime Minister’s Economic Advisory Council Chairman C. Rangarajan said on Friday.

The current financial year, he hoped, would end with a CAD of little over 5 per cent.

“The CAD (in December quarter) was higher than expected... But I believe CAD will come down during the fourth quarter (January-March). For the year as a whole, I expect CAD to be a little higher than 5 per cent,” Mr. Rangarajan told PTI.

CAD widened to a historic high of 6.7 per cent of GDP in December quarter to $32 billion on account of surge in oil and gold imports, besides weak exports. It was at $20 billion (4.4 per cent of GDP) in the corresponding quarter of last fiscal. CAD is the difference between inflow and outflow of foreign funds.

Even at over 5 per cent, the CAD would be nearly double the mark of 3 per cent during 1991 — the year when India faced the foreign exchange crisis.

Ratings agency Crisil’s chief economist D.K. Joshi said the higher CAD could weaken the rupee. However, it is expected to come down as a whole, he said.



did this happen too??
Current account deficit rises to 5.4 % in Q2 - The Hindu



that belongs to december we've already recovered to 5.4% and still improving



gold,fertilizers and coal are crucial reaasons though we also import petroleum we export most of the byproducts

thanks for info

 

[Yogi]

In the han of Indian, no difference with in the hand of India, all wealth

Yes, practically it makes no difference but International agencies take the theoritical approach.

Never mind we r working to sort it out this just a quarters CAD overall its expected to remain around 5.1-5.4% only.

Besides new policies to buy Indian products in electronics will further help in future.

But i believe the major problem is low expenditure on mineral research in India, our land belongs to the same Australian belt n not Asia so there is a huge potential for undiscovered reserves in India.

Lets hope GOI wakes up on time....

 

[neehar]

thanks for info

my pleasure.just did my duty..

 

[IND151]

Yes, practically it makes no difference but International agencies take the theoritical approach.

Never mind we r working to sort it out this just a quarters CAD overall its expected to remain around 5.1-5.4% only.

Besides new policies to buy Indian products in electronics will further help in future.

But i believe the major problem is low expenditure on mineral research in India, our land belongs to the same Australian belt n not Asia so there is a huge potential for undiscovered reserves in India.

Lets hope GOI wakes up on time....

what is the final decision of GOI on that policy?

 

[Yogi]

what is the final decision of GOI on that policy?

AFAIK Its still under evaluation so that it can facilitate the industrialists from any sudden backslash but it'll definitely come out soon as Chidambram expects electronics imports to exceed gold by 2020 if we didn't change the policies...