FinMin estimates April-June CAD at $23 billion

High gold imports seen as contributor

India's current account deficit (CAD) in Apr-Jun is expected to be around $22 to $23 billion, higher than expected due to huge gold imports especially in May, a finance ministry official said.

“We expect it to be $22-23 billion...first quarter was not a good quarter for balance of payments, there were (huge) gold imports,” the official said.

The Reserve Bank of India will release  CAD data on Monday.

According to statistics released by commerce and industry ministry, trade deficit in Apr-Jun widened to $50.2 billion from $45.2 billion a quarter ago. The ministry has estimated gold and silver imports during the April-June period to be $18.4 billion.

A current account gap of $22.8 billion would translate into approximately 5.1 per cent of gross domestic product.

The current account deficit is unlikely to slip below 5 per cent of GDP, the official said.
Anything less than 5 per cent will be a bonanza (on current account deficit)., he said.
India's capital account, however, may manage to finance the CAD, the official said.

“The first quarter capital account we are managing (to finance the current account). Foreign institutional investments were good till May. Foreign direct investment was okay, it was around $4 to $5 billion. Roughly (we expect) $23-$24 billion from the capital account,” the official said.