CAD may drop to 4.9% of GDP in Q3: Nomura

After narrowing in Q2 of fiscal 2012,Indias current account deficit (CAD) is likely to worsen again to an all-time high of around 4.9 per cent of GDP in Q3,Japanese investment bank Nomura has said. CAD was 3.9 per cent in Q2 of 2012 and 4.2 per cent in the third quarter of FY 2011.

A sharp deterioration in the trade deficit is the main reason, it says. According to monthly customs data,the trade deficit widened to 12.2 per cent of GDP in Q3 from 9.7 per cent in Q2. While oil prices have risen,most of this worsening is in the non-oil segment. We estimate that the oil trade balance has remained broadly unchanged,while the non-oil trade balance has worsened to -6.1 per cent from -3.3 per cent in Q2, it said.