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India's current account deficit in 'comfort zone'

February 22, 2006 13:37 IST
Source:PTI
India's current account deficit is projected to be at 2.9 per cent of GDP for 2005-06, according to an Economic Advisory Council report presented to Prime Minister Manmohan 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."

The EAC, however, observed that there was growing divergence between the trade data as reported by Reserve Bank of India and Directorate General of Commercial Intelligence and Statistics.

"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 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.

Source: PTI
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