Costlier imports and tepid merchandise exports are expected to lead to deterioration in current account deficit (CAD) in the current financial year, according to the Finance Ministry’s monthly economic review. Global headwinds, however, would continue to pose a downside risk to growth as crude oil and edibles, which have driven inflation in India, remain major imported components in the consumption basket.
Strong goods and service tax revenue and the windfall tax levied on July 1 will help the Centre to meet its fiscal gap target, which had come under pressure after the cut in excise duty on petrol and diesel, along with the high capital expenditure target.
