Rising crude oil prices contributed to India’s trade deficit widening to $13.72 billion in April 2018, from $13.69 billion in March, and compared with the $13.25 billion shortfall in the same month last year, according to official data released on Tuesday.
Merchandise exports rebounded from a contraction in the preceding month and increased 5.17% year-on-year to $25.91 billion, from $24.64 billion in April 2017. Exports had shrunk 0.66% in March 2018 to $29.11 billion.
“Imports during April 2018 were valued at $39.63 billion (₹2,60,084.67 crore) which was 4.6% higher in dollar terms and 6.43% higher in rupee terms over the level of imports valued at $37.88 billion (₹2,44,380.52 crore) in April 2017,” the government said in a release.
‘Doesn’t augur well’
“The merchandise trade deficit increased modestly… with a contraction in imports of gold and precious and semi-precious stones, and electronic goods, allaying the impact of higher crude oil prices,” Aditi Nayar, Principal Economist, ICRA, wrote in a research note. “Nevertheless, the continued rise in the crude oil price in the ongoing month does not augur well for the upcoming print of the merchandise trade deficit.
“Assuming an average price for the Indian crude oil basket of $70/barrel, we expect the net petroleum, crude and products import bill to surge to $93 billion in FY2019 from $70 billion in FY2018,” Ms. Nayar added. “This is likely to push up the current account deficit to $65-70 billion or about 2.4% of GDP in FY2019.”
April’s export rebound was, however, still weaker than the 11.5% growth seen even as recently as January.
“Following the contraction recorded in March 2018, exports reverted to a YoY expansion in April 2018, led by the high growth in engineering goods, chemicals, drugs and pharmaceuticals and electronic goods, which offset the YoY decline in segments such as textiles, gems and jewellery and iron ore,” Ms. Nayar wrote.
Merchandise imports, on the other hand, saw growth slowing in April to 4.6% from 7.2% in March. However, the distribution of imports between petroleum and non-petroleum products shifted in April.
While crude oil and petroleum imports increased by 41.5% in April, imports of non-petroleum items saw a contraction of 4.3%. In April 2017, non-petroleum product imports had grown 51.9%, according to CMIE.
The trade deficit widened last fiscal to $156.8 billion, from $108.5 billion in the previous year, mainly driven by a rising oil import bill.
