Balance of payment (BoP) situation was broadly neutral during Q2FY13 as the widening current account deficit (CAD) was offset by adequate improvement in capital inflows. CAD widened to approx. USD 22.4 billion, an all‐time high of 5.4% of GDP versus 3.9% previously, mainly on account of sharp weakness in merchandise exports and steady imports.
Commenting on the outlook, Edelweiss Securities said, "In the coming quarter (Q3), CAD is expected to remain elevated as export slowdown continued and gold imports picked up. However, we do foresee improvement in Q4 as improving external demand helps exports and as gold imports normalize after seasonal uptick. Given these trends, we are revising our FY13 CAD estimate to approx. USD 74 billion (4% of GDP) compared to approx. USD 65 billion (approx. 3.3% of GDP) estimated earlier."
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