India's October trade deficit jumps 56% on higher gold and silver imports.

According to data released by India’s Directorate General of Foreign Trade (DGFT), the country’s trade deficit in October jumped significantly higher, mainly on account of higher gold and silver imports. However, the deficit levels were well below last year’s levels.

Releasing the data, Anup K Pujari-Director General of Foreign Trade stated that the trade deficit of the country widened to $ 10.56 billion in the month of October when compared with the deficit of $ 6.76 billion during September. Month-on-month, the trade deficit saw expansion of 56.2% in October. However, the deficit levels during October this year were well below the levels of $20.21 billion a year earlier.

The festive season demand for gold and silver resulted in spiked up imports during the month. The gold and silver imports by the country during October this year totaled $1.37 billion, which is sharply higher by 71.25% when compared with the imports of $ 800 million a month before. Again, this is much below $ 6.8 billion imports recorded during October last year.

As per data, the country’s total imports during October have declined by 14.5% y/y to $ 37.83 billion. The total exports by the country rose for the fourth straight month. The October exports by the country stood at $ 27.27 billion, higher by 13.5% year-on-year.

The widening trade deficit is a key driver of current account deficit (CAD). To contain CAD levels, the government had imposed a sequence of tight curbs on gold and silver imports into the country together with steep hike in import duty to 10%.

Source : resourceinvestor.com