Trade and current account deficits are managed within limits: Manmohan Singh

ON BOARD AIR INDIA ONE - The Prime Minister, Dr Manmohan Singh, has said trade and current account deficits are managed within limits, and added that capital flows will be managed in a manner that it does not give rise to inflationary problems.

The Prime Minister, who returned to India from the G-20 summit in South Korea, late night on Friday told reporters on board Air India One: “We have a trade deficit of about 7-8 percent of our GDP. We have a current account deficit of about 2.5 to 3 percent of our GDP. We are not piling up reserves. So we are not creating any problems for the functioning of the global system.”

“We are not a surplus country in that sense, we have a deficit, but our deficit will and has been managed within the limits of prudence,” he added.

Dr Singh further said capital flows can create problems, but India is not in that stage where capital flows can become a major problem.

“Well, capital flows can create problems but we are not in that stage where capital flows can become a major problem. We will manage our affairs in such a manner that capital flows do not give rise to the type of inflationary problems that you have referred,” he said.

The Prime Minister, however, ruled out the possibility of setting up a financial sector development council.

“No there is no such possibility. Our reforms are well thought of. They were in response to the needs of the time. And our requirements will be the sole determinant of what type of reforms we wish to do,” said Dr Singh.

“But we do want, I think, a reformed system, which is internationally accepted because that is the way in which an interdependent world can manage flows of capital from one country to the other,” he added. (ANI)