Rising CAD, a major concern: RBI

The Reserve Bank of India (RBI) has stated that the increasing Current Account Deficit (CAD) has become a major obstacle in relaxing monetary policy. The CAD stood at a record high of 5.4% of GDP in the second quarter of 2012-13. The central bank stressed at the need of using expenditure-reducing policies in addition to expenditure-switching policies to bring CAD down to a more sustainable level of around 2.5 per cent of GDP. The bank’s concerns about Inflation have not dissipated and it has indicated that growth in 2012-13 might fall below the Reserve Bank’s October 2012 projection of 5.8 per cent.