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 GDP||4.90%||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.