Indian Stock Market News, Equity Market and Sensex Today in India | Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  

Current account deficit going wayward!
Mon, 27 Feb Pre-Open

Time and again, we have talked about the Indian government not likely to meet its budgeted fiscal deficit target. At worse, it may miss the target by a huge margin. The government has already run up a fiscal deficit of 92.3% of its budget estimates in 9mFY12. And the story does not end here. If we look at the current account, the status is more than pathetic. As per the estimation done by Economic Advisory Council to the Prime Minister of India (PMEAC), the country is going to witness current account deficit (CAD) of 3.6% of Gross Domestic Products (GDP). Even at the time of the 1991 crisis, performance was better than this, at 3% of GDP.

Worst of all, there is not much expectation on improvements in the coming fiscal year 2012-13 as well. As per the projection given by PMEAC, CAD is expected to come down to around 3% of GDP. Definitely, not a healthy sign. And looking at the governments's track record of missing most of the budget targets, the actual performance may be worse than that.

Well, why are we facing such a grim situation? On fiscal deficit front, slower revenues collections and increasing government expenditures due to subsidies and several welfare schemes are the main culprit. However, on the CAD front, despite India having a trade surplus in services, trade deficit is widening by the day. The major culprit is our high dependence on crude oil. With the rise in crude oil prices, import bills have been high during the current fiscal year 2011-12. In addition to that, performance on the exports front has also not been good on account of the weak global economic environment. Trade deficit contributes a major portion of our current account deficit.

What is the road to recovery? PMEAC advises the government to take many concrete steps to correct the sorry figures of both fiscal and current account deficits. It suggests many fiscal consolidation measures such as cutting down the oil and fertilizers subsidies and decontrolling diesel prices in a phased manner. It also emphasizes on improving the tax-GDP ratio. On the CAD front, PMEAC advises the government to improve the business environment in the country, especially in terms of policy reforms. That will also facilitate foreign capital inflows.

Would the upcoming budget pay heed to these suggestions? Would we finally see some action on the reforms front? One will have to wait and see.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

Read the latest Market Commentary

What else is happening in the markets today? Dig in...

Equitymaster requests your view! Post a comment on "Current account deficit going wayward!". Click here!


Stock Market Updates

RESPONSIVE INDUSTRIES Share Price Down by 7%; BSE 500 Index Up 0.7% (Today's Market)

Jul 2, 2020 09:25 AM

RESPONSIVE INDUSTRIES share price is trading down by 7% and its current market price is Rs 84. The BSE 500 is up by 0.7%. The top gainers in the BSE 500 Index are PFIZER (up 5.8%) and GSK CONSUMER (up 5.1%). The top losers are RESPONSIVE INDUSTRIES (down 6.6%) and OMAXE LTD (down 10.0%).

APL APOLLO TUBES Share Price Up by 5%; BSE CAPITAL GOODS Index Up 0.9% (Today's Market)

Jul 2, 2020 09:23 AM

APL APOLLO TUBES share price is trading up by 5% and its current market price is Rs 1,700. The BSE CAPITAL GOODS is up by 0.9%. The top gainers in the BSE CAPITAL GOODS Index is APL APOLLO TUBES (up 5.0%). The top losers are LAKSHMI MACHINE (down 0.2%) and HONEYWELL AUTOMATION (down 0.4%).

GUJARAT GAS at 52 Week High; BSE 500 Index Up 1.0% (Today's Market)

Jul 2, 2020 09:23 AM

GUJARAT GAS share price has hit a 52-week high. It is presently trading at Rs 330. BSE 500 Index is up by 0.7% at 13,677. Within the BSE 500, GUJARAT GAS (up 0.2%) and RITES (up 12.5%) are among the top gainers, while top losers are OMAXE LTD and MAGMA FINCORP.

RITES Share Price Up by 14%; BSE CAPITAL GOODS Index Up 0.7% (Today's Market)

Jul 2, 2020 09:19 AM

RITES share price is trading up by 14% and its current market price is Rs 294. The BSE CAPITAL GOODS is up by 0.7%. The top gainers in the BSE CAPITAL GOODS Index is RITES (up 14.4%). The top losers are LAKSHMI MACHINE (down 0.2%) and HONEYWELL AUTOMATION (down 0.4%).

SGX Nifty Up 76 Points, Gold Hits Record High, ONGC Q4 Results, and Buzzing Stocks in Focus Today (Today's Market)

Jul 2, 2020 Pre-Open

Top cues to track in today's stock market session.

View More Indian Share Market News

Most Popular

This is How You Should Trade Intraday(Fast Profits Daily)

Jun 19, 2020

In this video, I'll show you how to trade the market intraday like a professional trader.

Be Prepared to Profit from the Coming Crash in Oil Prices(Fast Profits Daily)

Jun 25, 2020

The stability in crude oil prices will not last much longer. Be ready to make fast profits when the time comes to short crude.

Tata Motors Tripled in 18 Months but You Can Do Even Better. Here's How...(Profit Hunter)

Jun 24, 2020

Rahul is ready for a repeat of his famous 2008 Tata Motors call.

This Ratio Says Smallcaps Are Your Best Bet to Ride the Post Covid Market Rebound(Profit Hunter)

Jun 23, 2020

Here's why I believe that post Covid rebound in smallcaps will be much sharper than largecaps.


India's #1 Trader
Reveals His Secrets

The Secret to Increasing Your Trading Profits Today
Get this Special Report, The Secret to Increasing Your Trading Profits Today, Now!
We will never sell or rent your email id.
Please read our Terms


Jul 2, 2020 10:59 AM