The government will further restrict imports of crude oil and precious metals as also certain other goods that are of non-essential nature to compress imports further, so as to bring current account deficit (CAD) to levels around $70 billion or about 3.7 per cent of the country's gross domestic product (GDP), finance minister P Chidambaram said today.
He said the government had succeeded in bringing CAD down to 4.8 per cent in the 2012-13 fiscal, from levels around 5.7 per cent earlier and is well on track to contain it at 3.7 per cent of GDP this fiscal.
"CAD will be contained at $70 billion, while the inflows will increase to a level that will be sufficient to finance the CAD. If the CAD is contained at $70 billion, it will amount to 3.7 per cent of the GDP," he said in a statement.
The recent measures announced by the government like increase in import duty on gold and other precious metals has helped retard the growth of the country's trade deficit to some extend, he pointed out.
Simultaneously, public sector financial institutions will raise quasi-sovereign bonds to finance long-term infrastructure as part of the measures to enhance capital inflows into the country, Chidambaram said.
The government will also liberalise overseas borrowing norms for corporates, he said, adding that public sector oil companies will also be allowed to raise additional funds through ECBs and trade finance.
Besides, the government is planning to liberalise foreign currency non-resident and non-resident external deposit schemes to attract long-term foreign exchange flows into the country, Chidambaram said.
He said like the global economy, the Indian economy is also facing challenges. "We believe that we have to do more to contain CAD, to reduce volatility in the currency market and to stabilise the rupee," he added.