"Traditionally we have seen it (current account deficit) at 2.5% of the GDP at comfortable level. I think we will take at least two to three years to get there...I think this country for another 20 years can run CAD at around 2.5% of GDP," he said addressing the Asia Pacific Regional Committee of IOSCO, a global body of securities market regulators from across the world.
Prime Minister'sEconomic Advisory Councilhas projected India's CAD at around 5% of GDP for 2012-13 after it reached to a historic high of 6.7% of GDP in the quarter ended December 2012.
Ahluwalia said India is facing many domestic problems and supply side constraints besides global slowdown. "While the global slowdown was an important factor for falling export, it wasn't the only reason why we slowed down. I think there are a lot of domestic problems. They are all connected with supply side rigidity," he said but the blame on previous years of high growth. "In many ways, I think these rigidities are result of several years of rapid growth which always puts a lot of pressure on the system," Montek said.
India's economic growth rate is estimated at 5% in 2012-13, the lowest in a decade, on account of poor performance of manufacturing, agriculture and services sectors. Ahluwalia said the Planning Commission was looking for holistic solutions and there was a need for coordinated action among various ministries to spur growth.
"Our job is to take a whole view and take holistic solutions to these problems because it's not possible for these issues to be simply resolved by individual ministry. They often require coordinated action by different ministries. I have no doubt we will be able to solve them much better than we anticipated these problems to be," he added.
