Curbs on gold narrow CAD

A steep decline of 57.2 per cent in gold imports, which amounted to $ 7.0 billion contributed significantly to the sharp narrowing of the current account deficit to $ 7.8 billion ( 1.7 per cent of GDP) in Q1 of 2014- 15 from $ 21.8 bil- lion ( 4.8 per cent of GDP) in Q1 of 2013- 14. It was however higher than $ 1.2 billion ( 0.2 per cent of GDP) in Q4 of 2013- 14. Gold imports in Q1 of 2013- 14 were $ 16.5 billion.

The RBI which released the preliminary data on India’s BoP for Q1, i. e., AprilJune, 2014- 15, on Monday said the lower CAD was primarily on account of a contraction in the trade deficit contributed by a rise in exports and a decline in imports.

On a BoP basis, merchandise exports at $ 81.7 billion increased by 10.6 per cent in Q1 of 2014- 15 as against a decline of 1.5 per cent in Q1 of 2013- 14. But merchandise imports at $ 116.4 billion moderated by 6.5 per cent in Q1 of 2014- 15 as against an increase of 4.7 per cent in Q1 of 2013- 14.

Non- gold imports recorded a rise of 1.3 per cent as against decline of 0.6 per cent reflecting some revival in economic activity.