Reflecting deterioration of the external sector, India’s current account deficit more than tripled to an all-time high of 4.5% of the GDP in the last quarter of 2011-12, on the back of rising oil and gold imports.
In 2011-12, Current Account Deficit (CAD), which represents the difference between exports and imports after considering cash remittances and payments, stood at 4.2% of GDP at USD 78.2 billion, as against the government’s estimate of 4 per cent.
“On account of large trade deficit, the CAD rose sharply to USD 21.7 billion in Q4 from USD 6.3 billion in Q4 of 2010-11. At this level, CAD worked out 4.5% of GDP (the highest ever) in Q4 of 2011-12 as compared to 1.3% a year ago,” RBI said while releasing the Balance of Payment statement on Friday.
According to RBI, “The CAD widened to the highest ever level both in absolute terms and as a proportion of GDP.” It was USD 46 billion or 2.7% of the GDP in 2010-11.
Commenting on the data, global financial services firm Nomura said, “The outlook for net capital inflows depends as much on the domestic pull factors (investment climate and growth outlook) as on the global push factors.”