Trade Deficit at 29 Month High as Gold Imports Rise
NEW DELHI: India’s trade deficit swelled to a 29-month high in April as imports led by gold grew sharper than exports.
Imports grew 49% from a year ago to $37.8 billion, buoyed by a 211% rise in gold imports.
Exports increased 19.7% to $24.6 billion, widening trade deficit to $13.2 billion from $4.8 billion in the year ago period.
“In continuation with the double-digit growth exhibited by exports during March 2017, exports during April 2017 have shown growth... Overall the trade balance has improved,” commerce and industry ministry said in a statement on Monday.
Gold imports in the month ballooned to $3.8 billion from $1.2 billion in the year-ago period.
“With every other form of financial asset fetching lower returns, it is gold that people are turning to as investment.
Add to that rupee appreciation and latent demand for gold due to demonetisation, and imports of the yellow metal have skyrocketed,” said India Ratings chief economist DK Pant.
The pace of growth of non-oil, non-gold imports firmed up to 43%, indicating strengthening domestic demand.
Oil imports in April saw a 20% spike to $7.3 billion while non-oil imports were up 54.5% at $30.5 billion.
This was the eighth consecutive month of rise in exports.
Twenty-three out of 30 sectors showed an increase in exports.
Ganesh Kumar Gupta, president of Federation of Indian Export Organisations, said that the increase in imports was primarily on account of high imports of petroleum, electronic goods, gold, pearls, precious and semi-precious stones, which augured well for gems and jewellery exports during the first month of the fiscal.
Attributing growth in exports to an uptick in demand in the US and Europe, EEPC India chairman TS Bhasin said, “Continuation of accommodative monetary policies along with fresh policy measures in major economies are helping the global markets, also supported by a steady revival in most of the commodity prices”.