Though the CAD in the first quarter of 2013–14 was higher at 4.9 per cent of GDP, going forward, it is expected that the deficit would moderate significantly due to reduced imports of gold, growing exports, particularly in the context of improved economic conditions of the advanced countries and the lagged impact of the rupee depreciation on the trade balance.
Our foreign exchange reserves can be considered comfortable with a reserve cover of over 35 months to the CAD. The government has reaffirmed its commitment to fiscal consolidation and it is expected that the targets will be met.