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Current account deficit to touch 1.9 pc: Sinha

Our Bureau

NEW DELHI, Dec. 5

INDIA'S current account deficit is expected to be close to 1.9 per cent of its gross domestic product (GDP) during the current financial year, due to the burgeoning oil bill, the Finance Minister, Mr Yashwant Sinha, said today.

He also said that given the comfortable foreign exchange reserves position, there would not be any run on the country's currency.

Although the oil bill would be higher by over six to seven billion dollars this time, the Government was trying to keep the current deficit down to around 1.9 per cent compared to 0.9 per cent of the GDP, he told the Rajya Sabha on Tuesday.

Mr Sinha also defended the decision of the Government to bolster the country's foreign exchange reserves by mopping up money through the India Millennium Bonds. ``Experience of the past has shown that the foreign exchange reserves are not unstable. Even during the height of the South East Asian crisis, there was no run on the reserves and the Foreign Institutional Investors (FIIs) withdrew only $4 million,'' he said.

Thanks to augmenting the reserves by close to $9 billion over the last two years, the country was in a good position to meet the demands arising out of a higher oil bill and also other contingencies.

Mr Sinha, however admitted that although the position on the foreign exchange reserves front was comfortable, the best course would be to run down the trade account and by reducing the current account deficit.

While the country was doing well on the export front, the slow down in non-oil imports and non-gold imports was a matter of concern, Mr Sinha said. ``It is a matter of concern for the economy when there is a slow down in imports. The Government is trying to initiate revival measures,'' he said.

On the utilisation of the Resurgent India Bonds, the Minister said that Rs 5140 crore had been invested in Government of India securities, Rs 1986 crore in the form of cash reserve ratio and Rs 6144 in infrastructure bonds.