NEW DELHI: Trade deficit touched a record $19.6 billion in October as exports fell below the $20 billion mark for the first time in a year and imports maintained their momentum.
According to preliminary data released by the commerce department on Tuesday, export growth moderated to 12.4% in October with the value of shipments out of the country estimated at $19.9 billion.
"In any sector, it is the lowest in the last three months, deceleration is uniform," commerce secretary Rahul Khullar said while warning that the "picture is not going to be rosy for the next six months".
In contrast, imports surged 36.7% to $39.5 billion on account of a steep rise in oil, gold and coal imports. According to numbers compiled from the commerce department and Bloomberg database, trade deficit in October is significantly higher than the previous monthly record of $15.7 billion seen in August 2008 and May this year.
Khullar, however, said that trade deficit over the next few months is going to narrow as local producers adjust to the changing demand situation and lower import of inputs.
According to data available with the commerce ministry, export volumes have continuously declined from $29.4 billion in May, although imports have not seen a decline of same magnitude (see chart). From a peak of 82% in July, export growth has been slowing every month. It moderated to 44.25% in August, 36.36% in September and is estimated at 12.4% in October.
But given the high growth rates witnessed in the first half of the financial year, exports in April-October are estimated to have increased around 46% to $179.8 billion.
Although Khullar said the government remained "cautiously optimistic" about reaching the $300 billion export target for the current financial year, the asking rate has shot up since shipments out of the country would have to be worth $24 billion a month between November and March.
Already, the impact of the problems in Europe is showing on sectors such as electronic goods where contraction was witnessed in October. Engineering and petroleum exports too grew by 2.6% and 9.4%, respectively.
TNN | Nov 9, 2011