‘Govt may have to draw $9 b from forex reserves to bridge CAD’

The Prime Minister’s Economic Advisory Council has said the Government may have to dip into the forex reserves to bridge the current account deficit. This contrasts sharply with Finance Minister P. Chidambaram’s confidence that foreign funds flow would finance CAD. In line with the Finance Ministry, the Council put the CAD at $70 billion, or 3.8 per cent of GDP, but did not think the net capital flows (total foreign institutional investment, foreign direct investment, external commercial borrowing and non-resident Indian deposits) would finance it.

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