Current Account Deficit, CAD, is likely to be lower than the projection of 3.8 per cent of the GDP and India will be in a better position to neutralise the impact of the tapering of monetary stimulus by the US Fed. This was stated by Planning Commission Deputy Chairman Montek Singh Ahluwalia while talking to newsmen in New Delhi. The Current Account Deficit is the difference between inflow and outflow of foreign exchange.

During 2012-13, the CAD was at all-time high of 4.8 per cent of GDP or 88.2 billion dollar. Government proposes to bring it down to 70 billion dollar or 3.8 per cent of the GDP.

Asked about the Planning Commission Member Saumitra Chaudhuri’s projections that CAD will be 2.5 per cent or range
between 40-45 billion dollar, Mr. Ahluwalia said, it is not a Planning Commission’s estimate. This is his personal estimate. However supporting Chaudhuri’s estimate, he said, if one view the growth grooming because of agriculture and its impact on non-agriculture demand which is not very import intensive, then Current Account Deficit may be lower.

During the first quarter this fiscal, Indian economy grew at 4.4 per cent lower than 4.8 per cent in the previous quarter. Economy has grown at a decade low rate of 5 per cent last fiscal. The government expects the growth to range between 5 to 5.5 percent this fiscal.