(a) the policy followed by the Government and the Reserve Bank of India (RBI)
to service the Current Account Deficit;
(b) the estimated vis-a-vis actual current account deficit as percentage of
GDP during the last three years, quarter-wise including foreign banks; and
(c) the short-term and long-term measures taken/being undertaken by the
Government to reduce the current account deficit?
MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI NAMO NARAIN MEENA)
(a)to(c) Government and Reserve Bank of India has taken a number of measures to
contain the current account deficit (CAD) and boost capital flows. These,
inter alia, include compression in import of gold and silver and non essential
items including hike in custom tariffs and administrative measures, public sector
financial institutions to raise quasi-sovereign bonds to finance long term
infrastructure, liberalizing ECB guidelines, PSU oil companies to raise
additional funds through ECBs and trade finance, and liberalizing non-resident
deposit schemes, RBI’s intervention in the foreign exchange market, and
liberalizing FDI. Besides, a number of export promotion schemes are in place to
promote exports and certain additional features have been made like widening of
Interest Subvention Scheme and raising the rate of subvention from 2 per cent to
3 per cent, broadening the scope of Focus Market Scheme, Focus Product Scheme
and Incremental Export Incentivisation Scheme etc.
Government and RBI do not estimate or target specific levels of CAD, but seek to
monitor the balance of payments developments closely and calibrate policies/
measures to meet broad objectives to moderating CAD to sustainable levels.
India’s current account deficit during last three years, quarter-wise, is given
below:
Year Quarter Current Account Deficit Current Account Deficit (US$ billion) as per cent of GDP 2010-11 Q1 13.4 3.5 Q2 17.2 4.5 Q3 11.2 2.5 Q4 6.2 1.3 2011-12 Q1 17.5 3.8 Q2 18.9 4.2 Q3 20.0 4.3 Q4 21.8 4.4 2012-13 Q1 17.1 4.0 Q2 21.1 5.0 Q3 31.8 6.5 Q4 18.2 3.6 2013-14 Q1 21.8 4.9 Q2 5.2 1.2Source: Reserve Bank of India.