Highest ever CAD this year
RESERVE Bank Governor D SubbaRao predicted that we may be heading for the highest ever current account deficit (CAD) this fiscal. "Last year, CAD was 4.2 per cent of GDP, but this year we expect it would be significantly higher than that. It's going to be historically the highest CAD measured as a proportion of GDP," said SubbaRao yesterday.
He added, "We would not worry if the widening CAD is on account of import of capital goods, but here it is high on account of import of oil and gold. The other concern is the way we are financing it. We are financing our CAD through increasingly volatile flows. Instead, we should ideally be getting as much of FDI as possible to finance the CAD. On the other hand, what we are getting is a lot of volatile flows to finance it,"
Can all the economists persuade the Government to live within its means?