Current a/c deficit at record high

India’s current account deficit (CAD) hit a record 6.7 per cent of GDP in Q3 from 5.4 per cent in Q2, driven mainly by larger trade deficit on account of uncontrolled imports of oil and gold. Analysts and pundits were proved wrong as the CAD leaped ahead of predictions of the current account deficit coming in at between five and six per cent. Releasing the balance of payments (BOP) position for the October-December quarter on Thursday, the RBI said while exports showed no significant growth in the third quarter compared with a 7.6 per cent growth in Q3 of 2011-12, imports leapt 9.4 per cent spurred largely by oil and gold imports. Reacting to this huge surge in the current account deficit, the finance ministry sought to downplay the matter, saying, “Though this number is large, it is not surprising. At the same time, merchandise exports have recorded positive growth for the second successive month in February.”