India's current account deficit lowers to 3.6%
Mumbai: India's current account deficit narrowed to 3.6 per cent of gross domestic product in the first quarter of 2013, down from a record high in the previous quarter, data showed Thursday.
The lower-than-expected deficit may ease pressure on the Indian rupee, which touched a new record low of more than 60 to the dollar on Wednesday, deepening the abrupt slide in the currency in recent weeks.
Rupee up 32 paise vs dollar in early trade
The deficit for the three months to March was $18.1 billion, compared with a record $32.6 billion or 6.7 per cent of GDP for the previous quarter, the Reserve Bank of India (RBI) said in a statement.
Dealers said the RBI may have released the data, which had been due on Friday, earlier than expected to boost sentiment after the rupee sank on Wednesday. The figures come as the Congress-led government struggles to stimulate the economy, that grew at a decade-low of five per cent last year, ahead of elections due next year.
"The data was well above our expectations, as the services sector performed better than expected in the March-end quarter," said Siddhartha Sanyal, chief India economist with Barclays Capital.
Barclays had expected the deficit to be around $20 billion.
India's deficit stems mainly from large oil and gold imports and weaker exports amid the global economic downturn, which has raised inflation concerns. The imbalance in the current account, which measures the gap between inflows of foreign currency and outflows and is the broadest gauge of trade, is the biggest risk to the economy, according to the RBI.
For the full fiscal year ended March, the current account gap was $87.8 billion, or 4.8 per cent of GDP, compared with $78.2 billion a year earlier. For the latest quarter just announced, analysts had expected a current account deficit of around $21.5 billion, or 4.4 per cent of GDP, media reports said.
India is seeking to narrow the deficit and boost growth in order to avoid a sovereign debt rating downgrade threatened by global credit ratings agencies. In September, the government initiated a string of liberalisation measures to open up sectors such as retail, insurance and aviation to foreign investors and jump-start growth before it faces voters in 2014.
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