India Q1 FY 2014 CAD in line with expectations



The current account deficit for the April-June quarter of current financial year has come inline with expectation at $16.9 billion or 4.9% of GDP. The reading for the second quarter (July-September) is expected to be better due to growth in exports in Q2 and significant drop in import of gold. The overall CAD for FY14 is expected to be less than 4.0% of GDP. India's Finance Minister has set the FY-14 target for CAD at 3.7% or $70 billion. 


Q1 Fy14 June
Merchandise trade balance- $50.5 bn- $43.8 bn
Services (net) $16.9 bn $15.0 bn
Primary Income*-$4.8 bn-$4.9 bn
Secondary Income#$16.7  bn $6.8 bn
Current Account Balance - $21.8 bn- $16.9 bn
CAD as % of GDP4.90%4.00%

With all the recent measures taken by RBI and govt to increase dollar inflows in India and limit the current account deficit at $70 billion in FY-14, the pressure on Indian currency is expected to abate significantly going forward. This should help in keeping the inflationary pressure low and stock markets buoyant.



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