RBI chief says current account deficit unsustainable

BANGALORE Sat Apr 6, 2013 7:27pm IST

Reserve Bank of India (RBI) Governor Duvvuri Subbarao attends the monetary policy review meeting in Mumbai January 24, 2012.REUTERS/Danish Siddiqui/Files

Reserve Bank of India (RBI) Governor Duvvuri Subbarao attends the monetary policy review meeting in Mumbai January 24, 2012.

Credit: Reuters/Danish Siddiqui/Files

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BANGALORE (Reuters) - India's current account deficit is unsustainable at its present level of about 5 percent of gross domestic product (GDP), the head of the Reserve Bank of India said on Saturday, adding that a deficit of about 2.5 percent of GDP would be sustainable.

India's current account deficit hit a record $32.63 billion in the last three months of 2012, and stood at $71.7 billion for the April-December period, equivalent to 5.4 percent of GDP.

The deficit for the fiscal year that ended on March 31 is unlikely to be less than 5 percent, Duvvuri Subbarao, governor of the Reserve Bank of India, added in a speech in Bangalore.

The decision by new Bank of Japan Governor Haruhiko Kuroda to inject about $1.4 trillion into the Japanese economy in less than two years is seen possibly increasing capital flows into India, which should help finance the current account deficit, government officials told Reuters this week.

(Reporting by Harichandan Arakali; Writing by Henry Foy; Editing by Robert Birsel)

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