Author: Paul Ploumis17 Oct 2014 Last updated at 08:16:12 GMT
NEW DELHI (Scrap Monster): The US-based Citi said on Thursday that it expects the country’s Current Account Deficit (CAD) to remain under 2% for the current fiscal year. The FY ’15 CAD is likely to remain at 1.8% due to prolonged curbs on gold imports and softer crude prices. Citi also attributes the hike in gold imports during September to increased festive demand. Furthermore, the gold imports are likely to fade in the upcoming months.
The gold imports during Sep ’14 zoomed by over 450% to $3.75 billion. Silver imports too surged by 225% to $477 million. The combined import bill for gold and silver during the month totaled $4.23 billion, registering five-fold increase upon comparison with the net import bill of $830 million during September last year. The sharp rise in gold imports lifted the country’s Trade Deficit to $14.25 billion, significantly higher from $10.8 billion in August.
The continuing gold imports is likely to keep the total CAD for FY ’15 at $36.7 billion ie., 1.8% of Gross Domestic Product (GDP). The exports have also started displaying some momentum, registering 2.8% rise in September. The Indian government is most likely to persist with the existing strict controls on gold imports. The softening crude prices may also help to moderate the import bill going forward.
Citi assumes that overall exports by the country will rise to 7.5% from 6.5% growth registered during the initial half of the current fiscal. It expects the country’s gold imports to total 725 tonnes for the whole fiscal with prices averaging at $1250 per Oz. Also, it expects crude oil prices to average at $100 per barrel. Citi also presumes that non-oil and non-gold imports by the country will rise only in line with the GDP growth.