India's Current Account Deficit narrowed sharply to 5.2 billion dollars in the July-September quarter of 2013-14 on the back of turnaround in exports and decline in gold imports.
The Reserve Bank of India stated in a statement in Mumbai that the current account deficit, the difference between outflow and inflow of foreign exchange, was 21 billion dollars, in the second quarter of last fiscal (2012-13).
Both the government and RBI are expecting the current account deficit to be below 56 billion dollars in the current fiscal compared to the record high of 88.2 billion dollars during last fiscal.
The RBI also stated that the state run oil refiners have returned to the foreign exchange market to meet all their dollar requirements as volatility in currency rates has eased over the past few weeks.
India’s current account deficit rose to 4.8 percent of GDP in 2012-13, much above the government’s comfort level of 2.5-3 percent of GDP.
What is Current Account Deficit?
Current Account Deficit is a measure of difference between a country’s foreign exchange earnings and payments. In India gold and crude oil imports have accounted for the largest components of dollar outflow.
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