India will be able to contain its current account deficit (CAD) — the difference between dollar inflows and outflows — at $70 billion or 3.7% of GDP in 2013-14, economic affairs secretary Arvind Mayaram said on Tuesday as he forecast that the economy would grow by more than 5% in 2013-14.
Sharp slump in gold imports and a rebound in exports, however, are expected to narrow down CAD over the coming quarters, Mayaram added.
“As we are seeing growth clawing back, I am quite sure that the environment will be conducive for further incentivising of growth and we will see whatever steps have to be taken,” Mayaram told reporters in New Delhi. “It will be more than 5%. It cannot be less than 5%.”
Mayaram also said that as of now, a partial shutdown of the US government is not likely to have a major impact on the Indian economy.
India’s economic growth crashed to a four-year low of 4.4% in April-June this year, hit by a crippling industrial slowdown. It grew by 5% in 2012-13 , which is the slowest growth rate in a decade.
India’s industrial output grew by 2.6% in July, expanding for the first time in three months, triggering hopes of a rebound.
Infrastructure sector output grew 3.7% in August — the highest in seven months — boosted by strong coal, cement and electricity production, rekindling hopes of a sustained industrial rebound.
“The second quarter GDP growth should be better than first quarter ...The finance minister has said we need to incentivise growth. That continues to be the stand of the government. As far as the interest rate is concerned, it is completely the domain of the RBI and the governor will take a call on that,” Mayaram said.
India’s current account deficit stood at 4.9% of GDP or $21.8 billion during April-June this year.