By TIOL News Service

NEW DELHI, AUG 12, 2013: TO contain the surging CAD, the Finance Minister, Mr P Chidambaram, today announced on the floor of the House that the Government is going to take more steps , which are as follows:

•  Compression in import of gold and silver

•  Compression in demand for oil

•  Compression in certain imports (non-essential nature)

The FM said that he will also take measures to enhance the capital inflows into India and these will include:

•  Public sector Financial Institutions to raise quasi-sovereign bonds to finance long term infrastructure

•  Liberalising ECB guidelines

•  PSU oil companies to raise additional funds through ECBs and trade finance

•  Liberalising NRE/FCNR deposit schemes.

As a result of these measures the FM expects that the CAD will be contained at USD 70.0 billion while the inflows will increase to a level that will be sufficient to finance the CAD. The Government also expects that, like last year, there will be a small accretion to reserves at the end of the current year.

If the CAD is contained at USD 70.0 billion, it will amount to 3.7 percent of GDP (as against 4.8 percent in 2012-13).

Notifications with respect to tariff changes will be laid before the Parliament in the usual course, the FM added.