Current account gap hits record 4.8 percent in 2012-13

Mumbai, June 27 (IANS) 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, the difference between outflows and inflows of foreign currencies, 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 improvement in the fourth quarter of the financial year under review.

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

Current account is the broadest measure of foreign money flows. It tracks trades in goods and services and also investments. According to RBI, the sustainable level of current account gap is 2.5 percent of GDP.

Finance Minister P. Chidambaram said the fourth quarter data was lower-than-expected and the current account gap was likely to widen in the subsequent quarters.

"We must look at the figure at the end of the year where the CAD stands," Chidambaram said while reacting on the RBI data.

He said the market was too pessimistic and had over-reacted on the current account data.

"Markets have been over reacting as we have seen in the case of prediction for CAD last year which were much higher than 5 percent and we have seen that it is much lower than 5 percent," he said.

For the fourth quarter of 2012-13, the current account deficit was $18.1 billion, or 3.6 percent of GDP, sharply lower than the $21.7 billion deficit recorded during corresponding quarter in the previous year.

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.

In its Financial Stability Report, the RBI said financing the current account deficit would be a challenge.

"There is a risk that the capital flows could reverse on a large scale if the risk-off sentiment intensifies causing increased volatility in the Indian markets," the RBI said.

The data for fourth quarter 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.

Here is the highlights of the country's current account gap:

--CAD for 2012-13 stood at $87.8 billion, or 4.8 percent of the GDP

--It was $78.2 billion or 4.2 percent of the GDP in fiscal 2011-12

--For January-March 2013 quarter, CAD declined to 3.6 percent

--CAD had hit a record high of 6.7 percent in quarter ended Dec 31, 2012.

Matches

MORE TOP STORIES TODAY

Duminy steals first win for Delhi

Duminy steals first win for Delhi

Furious fifties by Duminy and Dinesh Karthik end a long losing streak for the Daredevils. More »

AB, Parthiv seal Bangalore's second win

AB, Parthiv seal Bangalore's second win

Royal Challengers overcame a stutter to cruise to the small target they were set by Mumbai Indians. More »

Glenn Maxwell carves his parallel universe

Glenn Maxwell carves his parallel universe

Glenn Maxwell seems to project an icy disdain when at the crease. Match situations rarely faze him and the bubble in which he plays excludes everyone … More »

Srinivasan can attend BCCI meeting

Srinivasan can attend BCCI meeting

His status as president of TNCA makes him eligible to attend the Working Committee meeting on Sunday. More »

No way back for Pietersen: ECB

No way back for Pietersen: ECB

Kevin Pietersen's hopes of reviving his international career appeared to end Saturday when ECB managing director Paul Downton said there was 'no way back'… More »

[REWIND] The world record that nearly wasn't

[REWIND] The world record that nearly wasn't

Twenty years ago this week, Brian Lara became Test cricket's highest scorer, but he almost didn't make it. More »

Moores gets second stint as England coach

Moores gets second stint as England coach

In a two-year spell from 2007 to 2009, the 51-year-old Moores led England in seven Test series. More »

Bangladesh senior players to see shrink

Bangladesh senior players to see shrink

Bangladesh's senior players will have three sessions with a psychological skill development coach later this month More »

BCCI is not anybody’s property — Dalmiya

BCCI is not anybody’s property — Dalmiya

Dalmiya feels that Srinivasan’s ‘power hungry’ attitude isn’t helping matters. More »

KP ridicules idea of day-night Tests

KP ridicules idea of day-night Tests

Kevin Pietersen has ridiculed the idea of day-night Test cricket, saying the game would be so different to proper Test cricket that we will need a whole… More »

Rajasthan edge low-scoring thriller

Rajasthan edge low-scoring thriller

The bowlers restricted Hyderabad to 133 for 6 before Rahane and Binny took Rajasthan over the line. More »

Tough for bowlers: Saeed Ajmal

Tough for bowlers: Saeed Ajmal

The 36-year-old believes the T20 format and rule changes in 50-over matches have made a real difference. More »

Maxwell blitz takes Punjab home

Maxwell blitz takes Punjab home

The Kings XI batsman blasted a 43-ball 95 to help his team pull off a massive chase against Chennai Super Kings. More »

BCCI members want independent probe

BCCI members want independent probe

The board members are realising after the Supreme Court's observations that something has to be done — IS Bindra More »

'BCCI lacks leaders to take on Srini'

'BCCI lacks leaders to take on Srini'

Two former BCCI presidents, Shashank Manohar and Jagmohan Dalmiya, have reacted strongly to the news of the BCCI calling an emergent meeting on Sunday… More »

Delhi look for first points against confident Kolkata

Delhi look for first points against confident Kolkata

Preview — The threat of Sunil Narine looms large again. More »

Bangalore vs Mumbai: A battle of the big-hitters

Bangalore vs Mumbai: A battle of the big-hitters

Preview — Given the firepower in both line-ups, Dubai crowd may see another high-scorer More »

Yuvraj tees off to Sharjah's delight

Yuvraj tees off to Sharjah's delight

Yuvraj Singh was hardly convincing to begin with against Delhi, but a big dose of crowd support and a helping of poor bowling meant he had the opportunity… More »

Stressed Trott stands down again

Stressed Trott stands down again

The England and Wales Cricket Board (ECB) on Friday confirmed that batsman Jonathan Trott is to take another break from all cricket with immediate eff… More »

PCB starts another coach hunt

PCB starts another coach hunt

The PCB has decided to not extend the contracts of head coach Moin Khan, fielding coach Shoaib Mohammad and batting consultant Zaheer Abbas, and has invited… More »

Fiery star Stokes bids to curb his temper

Fiery star Stokes bids to curb his temper

England all-rounder Ben Stokes admits he must keep his anger under control if he is to end his international exile. More »

Bangalore's arsenal blazes to victory

Bangalore's arsenal blazes to victory

Yuvraj Singh was back to his best in his first match for Royal Challengers Bangalore. More »

Pakistan cricketers face probe

Pakistan cricketers face probe

Pakistani cricket authorities have launched an investigation after a number of current international stars played in exhibition matches in the United States… More »

BCCI to meet before next court hearing

BCCI to meet before next court hearing

The BCCI will hold an emergent working committee meeting on April 20 to discuss the future course of action with regard to the Supreme Court hearing concerning… More »