New Delhi: India’s trade deficit in June widened to $7.33 billion, data showed on Wednesday, and an analyst said growing demand for imports, including oil, in a fast-growing economy could lead it higher in the months ahead
Imports surged an annual 36.7% to $19.2 billion in June, while exports rose by a slower 14% from a year earlier to $11.87 billion, hit by a rising rupee.
“The economy is growing at a fast pace and industry is doing well -- that means more imports. Exports have not performed well, mainly due to currency appreciation,” said D.K. Joshi, an economist with domestic rating agency Crisil. “With the rise in oil prices, the trade deficit may widen in the coming months,” he said, adding buoyant services exports would maintain a favourable balance of payments.
The deficit was $20.61 billion in the first quarter of the fiscal year that began in April, wider than $11.84 billion in the year-ago period. It was $3.64 billion in June a year ago.
During April-June, exports rose by 18.11% to $34.3 billion as the rupee gained about 6.75% against the dollar and squeezed the margins of exporters.
Last month, the Indian government announced a $320 million relief package for exporters hit by currency appreciation, including a cut in bank lending rates and an increase in duty refund rates.
Policymakers are still hopeful that India will attain its export target of $160 billion for the year to March 2008.
Imports however rose by 34.3% to $54.91 billion during April-June period.