India's current account deficit (CAD) will be contained at less than $40 billion this financial year, well below the record level in 2012-13, said Finance Minister P Chidambaram on Friday.
"On the CAD, the Budget speech says it will be contained below $45 billion. Today, 23 days before the end of the year, we can say confidently that the CAD will be contained at below say $40 billion," said Chidambaram.
The CAD, the excess of foreign exchange outflows over inflows, narrowed to $26.9 billion (3.1 per cent of GDP) in the first half (April-September) of 2013-14 from $37.9 billion (4.5 per cent of GDP) in the first half of 2012-13.
The CAD narrowed sharply to $4.2 billion (0.9 per cent of GDP) in Q3 from $31.9 billion (6.5 per cent of GDP) a year earlier as merchandise exports picked up and imports moderated, particularly gold imports, the RBI said on March 5.
Both the government and the Reserve Bank of India had taken steps to restrict gold imports, one of the main causes for the widening CAD in 2012-13.
The government increased customs duty on gold thrice in 2013 to 10 per cent and the RBI imposed a series of curbs on inward shipments of the metal.
Chidambaram also expressed confidence the government would achieve the revised fiscal deficit target of 4.6 per cent in 2013-14.
"We will achieve the fiscal deficit target for the current year. The revised estimate says 4.6 per cent and I am absolutely confident that we will achieve the target," he said. The gap between expenditure and revenue was 4.9 per cent of GDP in the previous financial year.
After taking over as Finance Minister in August 2012, Chidambaram had drawn up a financial consolidation road map to lower the fiscal deficit to 4.8 per cent of GDP in 2013-14, 4.2 per cent in 2014-15 and 3.6 per cent in 2015-16.