Restrained gold imports may augur sub-$70 billion CAD levels, says Indian Finance Minister
The sharp decline in Q2 gold imports is likely to make the current account deficit (CAD) a manageable number
NEW DELHI (Scrap Monster): The sharp decline in Q2 gold imports is likely to make the current account deficit (CAD) a manageable number, as per Indian Finance Minister, P. Chidambaram. The sharp decline in gold imports during the second quarter promises a better CAD figure for Q2. The figure for the whole year would be below $70 billion, Chidambaram said.
According to data released by the RBI, the CAD for the first quarter (April to June) stood at $21.8 billion, which is 4.9% of the GDP. This is higher upon comparison with 4% registered during Q1 2012.
Talking to reporters, the Finance Minister expressed fully confident of grinding down CAD to below $70 billion. Gold imports are to play a big role in taming the deficit. The gold imports during Q1 2013 were 345 tonnes. The second quarter gold imports are expected to fall below 65 tonnes. Imports of gold for the quarter ended September fell by over 77 per cent in value and 28 per cent in volume, according to finance ministry data. At 12-15 tonnes, the imports in September are estimated to be much lower than in the same month last year. The overall import bill for the July-September quarter on account of gold will be $2.7 billion as against $11.9 billion in the same period last year.
With gold imports plummeting to almost one-fourth over the quarter, the second quarter is expected deliver better CAD numbers. Restrained gold imports could comfortably pull down the deficit to below $70 billion.