C Rangarajan, Chairman of the Prime Minister’s Economic Advisory Council, has said that India’s current account deficit would slip down to 3.5 per cent of the country’s gross domestic product (GDP) by the end of this fiscal year.

Speaking at an interactive session at the Merchants’ Chamber of Commerce, Rangarajan added that the government was making efforts to keep the current account deficit close to the manageable level of 2.5 per cent over the medium term.

Speaking on the topic, he said, “This year the current account deficit will come down to 3.5 per cent of the GDP. Over the medium term, efforts are being made to keep the current account deficit around the manageable level of 2.5 per cent of the GDP.”

He said the combination of various facctors like better capital inflows, lower gold imports, and no major rise in oil prices would allow the government to drag the current account deficit.

During the last fiscal, the country’s current account deficit jumped to 4.2 per cent of the GDP due to combination of factors like higher gold imports and less capital inflows. Gold imports had jumped from $43 billion in 2010-11 to $62 billion in 2011-12.

He also added that rupee would not depreciate much, and that the manufacturing sector would rebound in the second half of the current financial year.