Widening CAD: A real threat

D. Subbarao, the Reserve Bank of India Governor warned about the widening Current Account Deficit(CAD) which will most likely be higher than last year. “Today, the external sector is vulnerable. Last year, the CAD was 4.2 per cent of gross domestic product (GDP). This year, in 2012-13, we expect the CAD to be significantly higher than that, historically, the highest CAD measured as a proportion of the GDP,” said Dr. Subbarao.
He warned about financing the CAD through volatile flows instead of getting much of foreign direct investment (FDI).

No recovery in Industrial production

 Continuing the sluggishness in the economy, the recent industrial output figure contracted to 0.6 per cent in December which is caused by poor performance of manufacturing and mining sectors and decline in production of capital as well as consumer goods.

The industrial output, as measured by the Index of Industrial Production (IIP) had grown by 2.7 per cent in December, 2011.

Industrial production growth stood at 0.7 per cent during April-December period of this fiscal, down from 3.7 per cent in the same period of 2011-12, according to official data released here on Tuesday.