RBI confident of financing CAD without drawing much from reserves
RBI Governor Raghuram Rajan evinced confidence that the country would be able to finance the Current Account Deficit (CAD) without drawing down much from the forex reserves.
RBI is of the view that CAD could be brought down to $70 billion or even below that. In fiscal 2012-13, CAD stood at a historic high of 4.8%, or $88 billion, of the GDP. The government has set a target of 3.7% CAD, or $70 billion, this fiscal.
The efforts of the RBI through FCNR-B and swap facility have yielded a total of nearly $1.4 billion. The market has also recuperated considerably after the US federal bank postponed the tapering of stimulus. Mr. Rajan stressed on improving country’s economic parameters regardless of the actions that the U.S. took.