India's April trade deficit at $13.48 billion, oil imports up 7%.

India’s trade deficit in April came in at $13.48 billion on Friday, according to data from the Ministry of Trade and Commerce. That number is a marginal decline from March 2012, when the trade deficit stood at $13.9 billion.


April imports increased 3.8 per cent on an annual basis to $37.94 billion. Oil imports, which account for the single largest chunk of India’s import bill, increased 7 per ent to $13.9 billion from the corresponding period last fiscal, while non-oil imports were $24.03 billion.


Exports, which stand to benefit the most from the recent depreciation in the rupee, grew 3.2 per cent from the corresponding period last fiscal to $ 24.45 billion.


Oil imports are the single largest burden for the government’s finances since India imports about 80 per cent of its crude needs and key fuels such as diesel, kerosene and LPG are heavily subsidized by the state.

The country's fiscal deficit is projected at 5.1 per cent of GDP in fiscal 2013.

The Indian currency has also been under consisderable pressure, falling to record lows in May. On the last day of May, the rupee fell to a fresh low of 56.52 against the dollar, which has been rising against the euro. A depreciating currency puts more pressure on India's imports -- dominated by oil, capital goods, and gold & jewellery -- as well as the deficit.

IT companies contribute a signfiicant amount to India's exports, but the fall in the rupee has not benefited them as much because of the economic slowdown in the US and Europe, where they earn most of their revenues. The weakness in the US recovery and a continuing slowdown in the euro zone has meant that the IT industry has been unable to make strong gains on the back of the rupee's decline.

Source : profit.ndtv.com