India's current account deficit is likely to narrow to 2.3 per cent of GDP this fiscal year as the new government is expected to focus on exports and reduce dependency on imports, global financial services major Citigroup said in a report.
Current account deficit for fiscal year 2013-14 is expected to be within $36 billion, or 2 per cent of GDP, and this fiscal year, it is likely to be slightly higher but contained at 2.3 per cent.
The report noted that oil, coal and iron ore sectors are likely to impact the current account deficit in FY15.
Current account deficit is the excess of foreign currency outflows over inflows.
The country's net oil import bill is likely to come in around 10 per cent lower in FY15, given moderation in crude prices and likely moderation in demand due to fuel price reforms.
The Citigroup report further said the new government is likely to be growth-supportive given its economic emphasis but the recovery in growth numbers would be gradual.
Citigroup has retained India's FY15 GDP target at 5.6 per cent, and has upgraded the FY16 estimate to 6.5 per cent.
A full-fledged recovery will be realised only in FY16 and FY17 as governance and institutional reforms will start reflecting in the numbers with a lag and high inflation and interest rates could impede growth in the short term, the report noted.
On price rise, the report said a renewed political will is likely to bring down inflation.
A consumer price index (CPI) target of 6 per cent is achievable if structural issues are addressed, provided the government implements measures like offloading excess food stocks, calibrating MSP with market prices, etc.
"Revise down our FY'16 inflation estimate to 6.5 per cent. Key risks for inflation estimate include, interplay between commodity and INR; and El Nino," it said.
In the recently concluded elections, the BJP-led National Democratic Alliance (NDA) scored an overwhelming majority of 334 seats in the 543- member Lok Sabha.
"Decisive election mandate positive for economy, BJP wins majority seats and stable government implies significant legislative power and no excuses."
Get Breaking news, live coverage, and Latest News from India and around the world on NDTV.com. Catch all the Live TV action on NDTV 24x7 and NDTV India. Like us on Facebook or follow us on Twitter and Instagram for latest news and live news updates.