labels: Economy - general, RBI
India's trade deficit $44.4 billion in April-October 2007: RBI report news
19 January 2008

According to a Reserve Bank of India report based on latest data released by the directorate general of commercial intelligence and statistics (DGCI&S) India's trade deficit was a staggering $44.4 billion during the first seven months of the current fiscal (April-October).

According to the report, the trade deficit in April-October 2007 swelled by $11.5 billion compared to the corresponding period in the previous fiscal.

The country's overall exports in April-October 2007 were a $85.5 billion while the country had to foot an import bill of  $129.9 billion.

Though imports outstripped the growth in exports, contrary to popular perception, the growth in oil imports, in value terms, decelerated sharply to 6.7 per cent between April and October 2007 from 44 per cent a year ago.

On the other hand, the non-oil imports during the first seven months of current fiscal registered an increase of 34.7 per cent compared to 18.4 per cent a year ago and contributed to nearly 91 per cent of the growth in overall imports during the period.

While the trade deficit on the oil account increased by just $2.5 billion during the period and stood at $18.6 billion, the non-oil trade deficit increased by $12.2 billion to reach $16.4 billion during the period. 

To put the picture in perspective, it might be pertinent to point out that POL imports in volume terms was higher by 13.7 per cent compared to a growth of 18.2 per cent a year earlier.

The average price of the Indian basket of crude oil at $70.6 per barrel in April-October 2007 was higher by 7.5 per cent compared with a price of $65.7 per barrel recorded in the previous corresponding period.

The report also says that "according to ministry of petroleum and natural gas, consumption of petroleum products during April-October 2007 was higher by four per cent compared to the same period in 2006".

The RBI report shows that while exports between April and October showed a lower growth of 20.7 per cent compared to a 25 per cent jump recorded during the corresponding period in the previous fiscal, however, the imports in the first seven months of 2007-08 at 25.2 per cent maintained nearly a similar growth that was recorded in the previous corresponding year.

In October 2007 India's merchandise exports witnessed a substantial increase of 35.6 per cent compared to 13.7 per cent in October 2006. The RBI report said, "This was the highest monthly growth in exports recorded during the current financial year so far".

The commodity-wise data reveals that there had been a decline in export growth across all major commodity groups, save gems and jewellery during the period under review. The export of textiles and textile products and handicrafts continued to register declining trend. Referring to the major drivers of export growth, the RBI report said engineering goods, petroleum products and gems and jewellery accounted for nearly 60 per cent of the country's total export growth.

The RBI report showed that exports of agriculture and allied products dipped by 12.5 per cent primarily due to the decline in tea, cashew, cotton and marine products. Exports of manufactured goods also recorded a 13.3 per cent growth against 16.9 per cent a year earlier. The decline in exports of chemicals and allied products from 20 per cent to nine per cent was primarily attributed to the slowdown in the export growth of basic chemicals, pharmaceuticals and cosmetics.

Exports of engineering goods also slipped from 34.9 per cent to 19.5 per cent during the period. Textile and textile products registered a 0.1 per cent decline in exports compared to a 13 per cent growth a year ago.

The report states that according to US department of commerce, office of textiles and apparel, US's import of textiles and apparel from India declined to 3.2 per cent in value terms and 1.9 per cent in volume terms.

Nevertheless, the US continued to be the major market for India's exports, though its share declined to 13.6 per cent from 15.2 per cent, and was followed by UAE, China, Singapore and UK.

In the case of imports, the major non-oil import drivers were capital goods, gold and silver. While import of capital goods increased by 28.9 per cent, that of gold and silver more than doubled during the period under consideration.


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India's trade deficit $44.4 billion in April-October 2007: RBI report