Current account deficit widens to record 4.8 percent

Mumbai  :  India’s current account deficit widened to a record 4.8 percent of the country’s gross domestic product (GDP) in the financial year ended March 31, due to high imports of gold and oil and sluggish exports, official data showed Thursday.

The current account deficit stood at $87.8 billion, or 4.8 percent of the GDP in the financial year 2012-13 as compared to $78.2 billion or 4.2 percent of the GDP in the previous year, according to data released by the Reserve Bank of India (RBI).

“Burgeoning trade deficit along with significant decline in invisible earnings caused widening of CAD during the year,??? the RBI said.

The situation would have been even worse had the number not shown improvements in the fourth quarter of the financial year under review.

For the January-March quarter, the current account deficit moderated sharply to 3.6 percent of the GDP from a historically high level of 6.7 percent reported in the previous quarter.

Better than expected fourth quarter numbers gave some support to the battered rupee, which slumped to a record low of 60.76 against a dollar Wednesday.

The rupee rebounded to 60.17 against a dollar after the RBI data was released. It touched a low of 60.62 in the intra-day.

The data was better than expected in the fourth quarter of 2012-13, essentially due to decline in imports of non-oil and non-gold products.

Merchandise imports declined by one percent in the fourth quarter, while exports increased by 5.9 percent, leading to lower trade deficit.

Trade deficit narrowed to $45.6 billion in January-March quarter as compared to $51.6 billion recorded in the corresponding quarter of previous year.

The net inflows under financial account during 2012-13 rose to $85.4 billion from $80.7 billion during the preceding year, mainly on account of higher inflows under FII, non-resident deposits and short term credits and advances, the RBI said.

“The increase in capital inflows led to an accretion to foreign exchange reserves by $3.8 billion during 2012-13,??? it said.