Mumbai: The current account deficit is likely to be at 1.7 percent in 2014-15 and will narrow further to less than 1 percent for the next two years, according to a report.
"Going forward, while exports outlook remain weak, we expect CAD to narrow from 1.7 percent of GDP in last fiscal year to less than one percent of GDP in the current fiscal and the next on account of soft commodity prices and contained gold demand," Citi said in a report here today.
A report by domestic rating agency, Crisil said the country's current account deficit is 1.1 percent.
The export touched USD 310.5 billion last fiscal, which was down 1.2 percent from USD 314.1 billion in the previous fiscal and 7.5 percent lower than the government's estimate of USD 340 billion for the year.
The fall in exports was mainly on account of 11 percent decline in petroleum exports following a massive correction in crude prices.
"Even after accounting for 11.2 percent decline in oil exports - from USD 63.1 to USD 56.1 billion, due to lower oil prices in FY15, growth in non-oil exports was a mere 1.2 percent at USD 254.3 billion from USD 251.3 billion," Crisil said in a report.
During the year, imports also declined 0.59 percent to USD 447.5 billion from USD 450.2 billion in FY14.
Decline in imports allowed merchandise trade deficit to rise only marginally to USD 137 billion in FY15 as against USD 135.8 billion in FY14.
Services trade surplus during April-February FY15 improved to USD 68.3 billion from USD 66.6 billion in the year-ago period suggesting that current account deficit would be kept under check.
The Crisil report further said muted growth in trade at the international level may be a hindrance for the country in reaching the USD 900 billion export target, as envisaged in the new Foreign Trade Policy, by FY20.
"India's new Foreign Trade Policy which aims to take total exports to USD 900 billion by 2019-20 may find the task difficult amidst weak global trade growth prospects," it said.
