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Current account deficit in 'comfort zone'

India's current account deficit is projected to be at 2.9% of GDP for 2005-06.

india Updated: Feb 22, 2006 14:05 IST
Press Trust of India
Press Trust of India

India's current account deficit is projected to be at 2.9 per cent of GDP for 2005-06, according to a Economic Advisory Council report presented to Prime Minister Manomohan Singh.

The EAC report on the country's Balance of Payments outlook for this financial year said at almost 3 per cent of GDP, the current account deficit may still be "in the comfort zone provided it goes to finance productive investment."

"During the current year, trade deficit under the DGCIS data is projected at 5.2 per cent of GDP compared to 7.7 per cent under the BoP data thereby widening the divergence to 2.5 percentage points of GDP. This results in a corresponding divergence in the Current Account Deficit (CAD) as well," an official release quoting the EAC report said.

"If the CAD is calculated using the DGCIS trade data, it would amount to only 0.3 per cent of GDP whereas it goes up under the RBI data to 2.9 per cent of GDP," it said, adding the divergence, particularly in import figures, may be due to payments for defence and civilian aircraft imports.

First Published: Feb 22, 2006 14:05 IST