India's current account deficit might come down to 3.5 percent by the end of the fiscal year, said C Rangarajan, Chairman of Prime Minister's Economic Advisory Council.
"The current account deficit is remaining at high level and we should work towards getting the current account deficit to more moderate levels. We should aim at the current account deficit of 2.5% of the GDP down from the current 4.5%. But in the current year, perhaps, the current account deficit may be around 3.5% of the GDP", said Rangarajan, as reported by PTI.
The current account deficit is a major challenge for the economy and there is a need to bring it down to moderate levels, he told reporters on the sidelines of a function.
India's current account deficit has come down mainly because of a decline in gold imports due to a lower demand in the domestic market owing to high prices. Gold imports constitute a major part of Indian imports.
He said that high inflation is still a major concern for the economy which is expected to grow at a modest 5.6 percent this year.
"In order to get back to the high level of growth, we need to address some major macroeconomic concerns -- first is to tame inflation. We had three years of high inflation. We need to bring it down to more comfortable levels. Second, the process of fiscal consolidation must continue and we should work towards getting the fiscal deficit down to three per cent of the GDP over the next five years," he said.
The high inflation rates have prevented the Reserve Bank of India from easing the monetary policy, despite a strong demand from the industry and the finance ministry.
The finance ministry had announced a fiscal consolidation map to achieve targets after much criticism for policy inaction from the industry and international rating agencies.