A day after the Reserve Bank of India (RBI) released data pegging the current account deficit at 4.9 percent of GDP, the finance ministry jumped in to assuage fears saying that the CAD for the 2013-14 fiscal would not exceed the red line of 4.8 percent.

"As such, we are confident that we shall be able to contain CAD at US $ 70 billion as well as get additional capital flows to finance it fully without any recourse to draw down of reserves in this year," Arvind Mayaram, secretary, department of economic affairs said on Tuesday.

According to the RBI, the current account deficit (CAD) at $21.8 billion has widened to 4.9 percent of gross domestic product (GDP) in the first quarter of the current fiscal year (April-June) up from 3.6 percent in the same quarter last year.

Mayaram blamed the high level of gold imports despite curbs imposed by the government for the increase in the CAD from 3.6 percent of GDP in the same quarter last year to 4.9 percent in the first quarter of 2013. "CAD would have been lower at US $ 14.5 billion excluding the higher level of gold imports," he said.  He further assured that with the measures announced by finance minister P Chidambaram, in August, gold imports would be limited to 800 tonnes and the economy will benefit from this move in the coming nine months.

In addition, the country’s exports grew by 13 percent over a one-year period while imports experienced a negative growth at 0.68 percent, the secretary said. He added, "Trade deficit narrowed in August to a five month low of USD 10.9 billion. Thus, CAD will be contained at US $ 70 billion. Already, many institutional analysts have revised their balance of payments (BoP) outlook on CAD and capital flows."

Commenting on the high CAD director general of CII Chandrajit Banerjee said, "It indicates that our economy continues to remain vulnerable to external environment."

"With exports seeing a moderation in growth and imports continuing to remain firm, we were not expecting a quick turnaround in the external situation in the first quarter," said Sidharth Birla, senior vice president, FICCI.

"The focus on curbing gold imports could be sharpened by promoting schemes that encourage citizens to bring idle gold into the market and monetize the same. Such measures would have a salutary impact on CAD", he added.

CAD, which is the difference between spending overseas and earnings, has been a major worry for the government and its institutions. In the last one year, the government has taken a slew of measures to restrict CAD to 4.8 percent in the current fiscal year.