India’s current account deficit (CAD) fell sharply in the latest quarter, the government said on Monday in a surprise ahead-of-schedule release of data — effectively underlining the success of measures to control low-priority gold imports and sending a signal that the rupee was on stronger ground after a crisis earlier this year.
CAD — the difference between dollar inflows and outflows — dropped sharply to $5.2 billion or 1.2% of GDP during July-September from $21.8 billion or 4.9% of GDP in the previous quarter. Lower imports and an export rebound aided the contraction.
The gap also tapered down sharply amid early signs of recovery in the US and Europe that have boosted shipment orders.
Gold imports during the quarter stood at $3.9 billion against $16.5 billion in April-June as inward shipments of the yellow metal slumped after the government and Reserve Bank of India (RBI) imposed a string of steps including higher customs duties.
Gold imports during the second quarter of 2012-13 stood at $11.1 billion.
“Lower CAD was primarily on account of a decline in the trade deficit as merchandise exports picked up and imports moderated, particularly gold imports,” RBI said in a statement.
Exports rose 11.9%to $81.2 billion during the quarter on the back of significant growth, especially in the exports of “textile and textile products”, “leather & leather products” and chemicals.
On the other hand, imports at $114.5 billion, fell 4.8% during the quarter compared to a 3% fall a year ago, primarily led by a steep decline in gold imports.
Over the past few months, the government and RBI have launched a string of steps to attract foreign capital to arrest a sliding rupee and contain CAD that hit a record high of 4.8% of GDP last year.