Reducing CAD may take years: Rangarajan

Bringing down India's current account deficit from the current levels of around 4.8 per cent of the country's gross domestic product (GDP) is a tough task and may take years of coordinated action, C Rangarajan, chairman of the prime minister's economic advisory council and a former governor of the Reserve Bank of India, said today.

Speaking at the inaugural function of the Indian Statistical Institute at Tezpur university, Rangarajan said while CAD in percentage terms has come down from its previous highs, it remains very high in absolute terms.

While it is lower than last years, it would require actions over a period of years to bring it levels of around 2.5 per cent of GDP, he said.

While improvements in other countries' economies as world economy picks up will improve exports, Rangarajan said, on the import side India needs to act on gold, coal and oil – the three items that account for bulk of the country's imports.

While local production of coal could be pushed up to a certain extent, he said, more efforts are needed on the energy conservation front,

Rangarajn expects the Indian economy to grow at close to 6 per cent in the current fiscal.

"I think we will have growth higher than last year. It should be higher than the Central Statistical Organization (CSO) projection of 5 per cent. This fiscal year growth rate should be around 6 per cent," he said.

Rangarajan's optimism is based on a good monsoon and the government's concerted efforts to achieve infrastructure targets.

He said some of the key infrastructure projects in roads, power coal are being speeded up and government in this sector is sure to encourage private activity.

These along with government stimulus will act as sure driver of growth, he added.