Economy not overheating, current account deficit manageable: Montek

Economy not overheating, current account deficit manageable: Montek

New Delhi: The plan panel on Monday said the economy was not overheating and the spurt in current account deficit, which is up three times in the first quarter of this fiscal to $13.7 billion from the year ago period, can be financed easily.

“I don’t think so", Planning Commission deputy chairman Montek Singh Ahluwalia said when asked if the economy was overheating, which refers to increase in prices of goods and services due to lack of adequate supply.

“I see strong signs (of) recovery. It is true that the current account deficit is little wider but it is easily financeable," he said.

Current account deficit, which represents flow of money out of the country barring capital movements, surged from $4.5 billion in the first quarter of last fiscal.

It represents over 3.5% of GDP, while many experts have pegged it at 3% for the entire 2010-11.

As for the overheating concerns, experts point to the latest government data which shows that food inflation climbed 0.98 percentage points to 16.44% during the week ended 18 September, from 15.46% in the previous week.

Among food items, milk prices soared by 24.32% during the week, compared to the same period last year, while fruit rates rose by 15.13%.

Part of the price rise has been attributed to disruption in supply of essentials due to heavy rains this monsoon season.