Gold imports fall while exports rise
In encouraging news for the beleaguered rupee, India’s trade deficit — the difference between imports and exports of goods and commodities — fell to a two-and-a-half-year low of $6.76 billion in September.
Lower imports of gold mainly, but also crude oil and other goods, and a healthy 11.15 per cent growth in exports helped pare the deficit to well below August’s figure of $10.9 billion.
This is good news for the current account deficit — the difference between imports of goods, services and all transfers of money, and exports of goods, services and transfers — which bloated to $88.2 billion or 4.8 per cent of GDP (gross domestic product) in 2012-13, raising fears of a balance of payments crisis.
“Imports showed a significant fall of 18.1 per cent, and exports a rise of 11.15 per cent in September. The trade deficit is the lowest in the last 30 months. I am quite confident that import-containment measures put in place for non-essential imports are playing out extremely well, and we need to continue this so that our rupee becomes stronger,” Commerce Secretary S.R. Rao told reporters here.
While the Reserve Bank of India decreed in July that 20 per cent of every consignment of gold imported will have to be set aside for export, the government increased duty on gold imports to 10 per cent in August.
These measures had the desired effect, as gold imports plunged more than 80 per cent to $0.8 billion in September from $4.6 billion a year earlier. Crude oil imports declined by about six per cent, to $13.19 billion.
During April-September this fiscal, exports grew by 5.14 per cent to $152.1 billion, while imports declined by 1.8 per cent to $232.23 billion. The trade deficit for the six-month period was $80.1 billion.
The rupee gained from its intra-day low of Rs.62.30 to the dollar post announcement of trade data, and closed at Rs.61.93, down 14 paise from Tuesday’s close.
Federation of Indian Export Organisations (FIEO) president Rafeeque Ahmed expressed confidence that exports would touch $350 billion this fiscal.
“The trade deficit is likely to come down to below $150 billion for this fiscal, which will help the government keep the current account deficit (CAD) within $70 billion,” he said.