Rising CAD, a major concern: RBI
January 31st, 2013
The Reserve Bank of India
(RBI) has stated that the increasing Current Account Deficit (CAD) has
become a major obstacle in relaxing monetary policy. The CAD stood at a
record high of 5.4% of GDP in the second quarter of 2012-13. The central
bank stressed at the need of using expenditure-reducing policies in
addition to expenditure-switching policies to bring CAD down to a more
sustainable level of around 2.5 per cent of GDP. The bank’s concerns
about Inflation have not dissipated and it has indicated that growth in
2012-13 might fall below the Reserve Bank’s October 2012 projection of 5.8 per cent.
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