India's current account deficit for fiscal 2007 is manageable: RBI

Mumbai, Aug 30 (UNI) The Reserve Bank of India (RBI) today said that the country's anticipated current account deficit for the fiscal year ending in March 2007 is manageable.

Presenting its annual report for 2005-06, RBI said the anticipated current account deficit in 2006-07 is manageable on the whole, despite the growing oil import bill. It may be noted that the RBI's financial year runs from July to June.

''Despite the growing oil import, the anticipated current account deficit is manageable, due to the continuing underlying strength of merchandise exports, invisibles and capital flows,'' the report said adding: ''The balance of payments is, therefore, expected to remain comfortable during 2006-07.'' The current account deficit for the fiscal year 2005-06 has been the highest since India opened its economy in 1991. It doubled to USD 10.61 billion from USD 5.4 billion in 2004-05 due to high oil prices and rising demand for imports.

The apex bank said that from a medium term perspective the current level of foreign exchange reserves remained comfortable. India's foreign exchange reserves are at a record level of more than USD 165 billion, compared to USD 137 billion at the end of 2005.

''Taking into account the possible levels of the current account deficits, the composition of capital flows, the international confidence in the ability of the country's payment position and pace and quality of growth, the current level of reserves continue to be comfortable,'' RBI said.

It said the continuous strength of external debt, reserves and exports and fiscal consolidation efforts were important factors for the country's recent ratings upgrade.

It may be recalled here that early this month, Fitch Ratings had upgraded India's sovereign debt rating to investment grade, citing an improvement in public finances, while Moody's Investors Service upgraded India's rating to investment grade last year.

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