| Date: |
12-10-2012 |
| Subject: |
India Trade Deficit Widens as Imports Rise |
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NEW DELHI--India's trade deficit in September widened to its biggest in 16 months due to a significant increase in imports while exports remained tepid, putting further stress on the country's external balances.
The trade gap widened to $18.08 billion from $13.19 billion in September last year, according to data released by the commerce ministry Thursday. It was also substantially wider than the August deficit of $15.6 billion.
The data deepens worries of India's weak balance-of-payments situation, which has weighed on the rupee as the country effectively borrows from overseas to fund its trade deficit. This leaves India vulnerable in times of crisis when global capital could rush out of the economy, said Sonal Varma, an economist at Nomura.
"While the surge in portfolio inflows after recent reforms and global liquidity easing are overshadowing the worsening trade balance, today's data highlight that India's external sector still remains in a very fragile state," Ms. Varma said.
The data showed exports in September fell 10.8% from a year earlier to $23.69 billion, while imports rose 5.1% to $41.78 billion.
Exports have been hurt by feeble demand in key overseas markets in the U.S. and Europe, which are struggling with weak economic growth, and look likely to fall short of the government's goal to achieve $360 billion in overseas shipments for this fiscal year ending in March. Exports reached just $143.68 billion in the April-September period, well short of the halfway mark.
India's rising import bill has been driven by its heavy dependence on crude oil imports, which meet more than three-fourths of its oil needs. A rise in global oil prices has also pushed up the country's import bill.
Crude oil imports in September shot up 30.7% on year to $14.09 billion. Ms. Varma said the rise was on the back of higher crude oil prices, a trend that continued in October.
On a month-on-month basis, exports were little changed from August's $22.3 billion. However, imports rose modestly from $37.9 billion in August.
Source : english.capital.gr
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