Current account deficit may exceed 3% of GDP: Y.V. Reddy
Thursday, November 25, 2021 2:21 PM

Related Stories

K.R. Srivats

New Delhi, Nov. 25

Former Reserve Bank of India (RBI) Governor, Dr Yaga Venugopal Reddy, has voiced qualified concern over the current account deficit (CAD) exceeding 3 per cent of Gross Domestic Product (GDP) in 2010-11 on the back of higher commodity prices and crude oil prices.

“Exceeding 3 per cent is likely now. Suppose a question is asked about how some persons (observers) believe that it will go to 4 per cent and are there any warning signals, I would definitely say no serious warning but careful watching (is required),” Dr Reddy told Business line here.

He was in the Capital for the launch of his book ‘Global Crisis Recession and Uneven Recovery'.

Dr Reddy's concern on CAD assumes added significance in the wake of a recent report from Goldman Sachs (NYSE:GS) that predicted CAD of 4 per cent for India in 2010-11 and even higher 4.3 per cent for 2011-12. Former Chief Economic Advisor to the Finance Ministry, Dr Shankar Acharya, had also in September forecast a record CAD of 4 per cent of GDP or higher for 2010-11.

Stating that India has only “less cushion” to face any oil price shocks at the current level of CAD, Dr Reddy noted that the big risk is the country's oil bill going up, leading to higher CAD.

Dr Reddy said that he entirely agreed with the RBI Governor, Dr D. Subbarao's stance that India should be comfortable if CAD is anywhere near 3 per cent, but not above it.

Capital flows

He, however, did not agree to the views expressed in certain quarters that India's absorptive capacity (on capital flows) is low.

“CAD is not something that is based only on absorptive capacity. Everybody feels you should increase the absorptive capacity. But you should allow the absorptive capacity to increase only up to the level at which rest of the world is willing to finance you,” Dr Reddy said.

In his book, Dr Reddy has mentioned that CAD has accelerated significantly, but also highlighted that India does not have significant macro-economic imbalances which need to be corrected as part of the post crisis programme.

(Source: )
(Source: Quotemedia)


Symbol :


Market news:

  • Pakistan foils capital bomb plot; missiles kill 3 Nov 26, 2021 09:58 AM

    • ISLAMABAD - Police arrested two would-be suicide bombers planning to attack a mosque and a government building in Pakistan's capital Friday, as local officials said another suspected U.S. missile strike near the Afghan border killed three alleged insurgents.
    • The military has responded by launching offensives in the remote northwest where the insurgents are based, and the U.S. has increased its barrage of missile attacks on those strongholds out of reach of the Pakistani army.
    • Police officer Bin Yamin said the detained men were linked to the Pakistani Taliban in the South Waziristan region, where the army has been fighting the militants since last year.
      • NKorea warns region is on brink of war Nov 26, 2021 09:15 AM

        • YEONPYEONG ISLAND, South Korea - North Korea warned Friday that U.S.-South Korean plans for military maneuvers put the peninsula on the brink of war, and appeared to launch its own artillery drills within sight of an island it showered with a deadly barrage this week.
        • The fresh artillery blasts were especially defiant because they came as the U.S. commander in South Korea, Gen. Walter Sharp, toured the South Korean island to survey damage from Tuesday's hail of North Korean artillery fire that killed four people.
        • None of the latest rounds hit the South's territory, and U.S. military officials said Sharp did not even hear the concussions, though residents on other parts of the island panicked and ran back to the air raid shelters where they huddled earlier in the week as white smoke rose from North Korean territory.
          • Another US missile strike kills 3 in Pakistan Nov 26, 2021 08:56 AM

            • MIR ALI, Pakistan - Pakistani intelligence officials say a suspected U.S. missile strike has killed three alleged militants in the country's northwest.
            • It's the latest in a barrage of attacks by unmanned drones on the stronghold of Taliban fighters targeting American and NATO forces in Afghanistan.
            • The area is home to a mix of Afghan and Pakistani Taliban.
              • Officials pull out of CA bomb factory, cite danger Nov 26, 2021 08:49 AM

                • ESCONDIDO, Calif. - Explosives experts have pulled out of a northern San Diego County home with a large quantity of bomb-making materials because it's too dangerous.
                • The Sheriff's Department says "proactive operations on site have been suspended" and local, state and federal explosives experts are making plans to re-enter the home and remove hazardous materials.
                • Among other things, bomb technicians found what is believed to Pentaerythritol tetranitrate, or PETN, which was used in the 2001 airliner shoe-bombing attempt as well as in last month's airplane cargo bombs.
                  • All-night shop-a-thon: Black Friday draws crowds Nov 26, 2021 08:42 AM

                    • Bargain shoppers, braving rain or frigid weather, crowded the nation's stores and malls in the wee hours of the night to get their hands on deals from TVs to toys on Black Friday.
                    • In a bid to grab shoppers earlier on the traditional start to the holiday shopping season, a number of stores including Old Navy, Toys R Us and Sears opened on Thursday's Thanksgiving holiday.
                    • Toys R Us' 10 pm. opening at its flagship store in Times Square drew 1,500 shoppers, says CEO Jerry Storch.

                      More news


    Recent Estimates

AnalystFirm NameSymbolEPS Estimate
mrbilltraderXXXXX POT$1.15
sam farahanXXXXX TECD$0.95
adfgafg ERTS($0.26)