Trade deficit in September at 5-month low; exports in witness negative growth.

Despite high oil prices, merchandise trade deficit was at a five-month low of $13.98 billion in September as compared with $17.39 billion in August. The deficit was $9 billion in September, 2017, data released by commerce ministry showed.

During April-September, the deficit was $94.32 billion.

Merchandise exports, however, witnessed a marginal negative growth of 2.15 percent at $27.95 billion in September from $28.56 billion a year and $27.84 billion in August.

“This decline is entirely due to the base effect resulting from September, 2017 being an abnormally high growth month of about 26% in dollar terms due to imminent cut off then for drawbacks at pre-GST (Goods and Services Tax) rates. This is temporary out of trend phenomenon,” according to a government statement.

Trade deficit, a key macroeconomic indicator, denotes that country’s imports exceeds its exports. In the current scenario, depreciation of the domestic currency has made inward shipments into the country more expensive, increasing the import bill.

Trade deficit had hit a five-year high in July and came in at $18.02 billion in July.

To rein the current account deficit and stabilise rupee, the government in the last weeks imposed curbs on certain non-essential imports.

“Despite this, as well as the measures unveiled so far by the Government to curtail non-essential imports, we will not be surprised if the merchandise trade deficit rebounds above $17.5 billion in October 2018...Notwithstanding the dip in the merchandise trade deficit in September 2018, India's current account deficit is expected to triple to a substantial $19-21 billion in Q2 (July-September) 2018-2019, or around 3.0% of GDP, from the modest $7 billion in July-September 2018-19,” Aditi Nayar Principal Economist at ICRA said.

Items such as petroleum products, organic and inorganic chemicals, drugs and pharmaceuticals, cotton yarn, handloom products witnessed positive export growth in September.

Imports grew 10.45 percent in September at $41.9 billion as compared with $37.9 billion a year ago.