India’s goods exports shrank 9.32% to $34.71 billion in August, while the import bill expanded 3.3% to an all-time high of $64.36 billion, fuelled by a doubling in gold imports to a record $10.1 billion.
The trade deficit widened to a 10-month high of $29.65 billion, the second highest monthly gap in merchandise trade.
Commerce Secretary Sunil Barthwal sought to allay concerns, arguing that the trade deficit should not be a matter of concern for a developing economy with high growth. “To the extent there are no foreign exchange issues, it should not matter,” he asserted.
On the surge in gold imports, the top trade official pointed to plausible factors such as the recent reduction in import duty from 15% to 6%, the decline in global gold prices and the fact that jewellers typically start stocking up for the festive and wedding season around this time.
While oil imports fell 32.4% to $11 billion, petroleum products clocked a sharper 37.6% decline to under $6 billion. Gems and jewellery exports also dropped 23.1% to a tad below $2 billion.
“The decline in value, with oil prices dropping six dollars, was a key reason for lower petroleum exports while the gems and jewellery sector has been impacted by the sanctions imposed by the G7 nations after the Russia-Ukraine conflict that has made it tougher to procure rough diamonds,” Mr. Barthwal said.
“However, the performance of our exports beyond gems and jewellery and petroleum, gives us comfort… that despite the clouds of uncertainty hovering globally, India is still a bright spot,” he noted.
ICRA chief economist Aditi Nayar reckoned that the “unexpectedly sharp widening” in the merchandise trade deficit in August could widen the current account deficit to 1.5-2% of GDP in the current quarter.
Published - September 17, 2024 04:07 pm IST
