| Date: |
18-11-2014 |
| Subject: |
Trade deficit widens as exports shrink in Oct |
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NEW DELHI: India's exports contracted 5% to $26 billion in October due to a fall in shipments of engineering goods, gems and jewellery, and pharmaceuticals.
With imports continuing to rise, trade deficit widened to $13.4 billion, putting fresh pressure on the government and the Reserve Bank of India to put fresh checks on gold imports.
Data released by the commerce department showed that imports rose 3.6% to $39.4 billion as gold imports went up almost four times in October, while silver shipments more than doubled. The surge in bullion imports negated the benefit of cheaper crude oil prices. Due to cheaper petroleum prices, India's oil import bill was 19% lower at $12.4 billion, while non-oil imports shot up 19% to over $27 billion.
Gold and silver apart, the big worry for policymakers was the decline in exports for the first time in six months, which exporters said was on account of depressed sentiments in the US and Europe, and resulted in fresh demands for government support from lobby groups such as Fieo.
Economists, however, suggested that there was not too much of a worry at present. "We expect non-oil, non-gold imports to rise in the coming months on stronger domestic demand. However, lower oil prices (lower oil import bill) and lower gold imports (as festive demand normalizes) should offset part of the increase and keep the current account deficit contained at around 1.4% of GDP in 2014-15 versus 1.7% in 2013-14," Nomura economists Sonal Varma and Aman Mohunta said in a note.
ICICI Securities Primary Dealership's A Prasanna and Abhishek Upadhyay said the current account deficit may be around 1.6% of GDP, compared to 1.7% last year, while trade deficit too will hover around last fiscal year's level.
Source : timesofindia.indiatimes.com
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