Mumbai: There are signs of decline in exports bottoming out and the current account deficit (CAD) is likely to remain “well contained and easily financed”, RBI Governor Raghuram Rajan said today. In the July-September quarter of the current fiscal, CAD rose to USD 8.2 billion or 1.6 per cent of the GDP, from 1.2 per cent or USD 6.1 billion in the April-June quarter.
Earlier, Finance Minister Arun Jaitley had said CAD is expected to be 1.2 per cent of the GDP for the entire 2015-16 fiscal. On exports, Rajan said, they remained in “contraction mode for the 13th successive month in December, although there are indications of a sequential bottoming out”.
In volume terms too, the rate of decline appears to be moderating, he said. Exports contracted for 13th month in a row in December 2015 as outward shipments shrank 14.75 per cent to USD 22.2 billion amid a global demand slowdown.
Imports too plunged 3.88 per cent to USD 33.9 billion in December over the same month previous year. Trade deficit during the month under review widened to USD 11.6 billion as against USD 9.17 billion in December 2014.
During April-December period of the current fiscal, exports dipped 18 per cent to USD 196.6 billion as compared to USD 239.9 billion in the same period of the previous fiscal. While softer petroleum, oil and lubricants (POL) and commodity prices helped to contain the trade deficit, these benign effects were offset by a spike in the quantum of gold and POL imports, he said.
“As a consequence, the trade deficit widened during December in relation to preceding months, though the overall current account deficit is likely to remain well contained and easily financed,” he said.
He further said, net foreign direct investment (FDI) and non-resident deposits have remained robust in relation to last year. “The persisting decline in oil prices may, however, impact the flow of remittances from the Gulf region where fiscal positions are deteriorating rapidly. Portfolio investment also recorded some outflows since November,” he said.
Nevertheless, as on January 22, 2016, foreign exchange reserves stood at USD 347.6 billion – an accretion of USD 5.9 billion during the current financial year so far.