July 19, 2013 / 13:24 IST
Exuding confidence that current account deficit (CAD) will decline in 2013-14, Prime Minister Manmohan Singh today said government and Reserve Bank will use all policy instruments to lower it.
"We will use all policy instruments available, fiscal, monetary and supply side interventions, to ensure that the CAD declines further over time," Singh said.
"It is not possible to do this in one year, but I expect that the CAD in 2013-14 will be much lower than the 4.7 per cent level recorded last year. It will decline further next year," Singh said. The government will strive to bring down the CAD to the ideal level of 2.5 per cent of GDP.
Also read: Growth to be below 6.5% for FY14; rupee key concern: PM
Current Account Deficit (CAD) occurs when total imports of goods, services and transfers are greater than exports. The CAD had hit a record high of 4.7 per cent in 2012-13 fiscal as rising oil and gold import widened the trade gap.
We are committed to bringing the CAD under control by addressing both the demand side and the supply side of the problem. "On the demand side, we need to reduce the demand for gold and the demand for petroleum products - the two biggest components of our trade deficit," Singh said.
He said measures taken by government to control gold demand are showing results and efforts are on to push exports.
"Gold imports declined sharply in June and I hope they will stay at normal levels from now on," Singh said. Gold imports in June are estimated to have fallen to around 31 tonnes, down from 162 tonnes in May and 141 tonnes in April.
Fiscal deficit, Singh said, mounted on account of stimulus packages given in the past and the target is to contain it to 4.8 per cent of GDP in the current year and reduce it further to 3 per cent by 2016-17.
"We are determined to meet the target for this year," he added. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
