BackIndia's trade deficit ballooning to record high in July
Citing preliminary data, India's trade secretary highlighted that the gap between exports and imports widened to $31.02 billion in July compared to $26.18 billion in the previous month.
PremiumIndia’s trade secretary B.V.R Subrahmanyam on Tuesday said the country's trade deficit ballooned to a record high in July as elevated commodity prices and the depreciating rupee inflated its import bill. Citing preliminary data, he highlighted that the gap between exports and imports widened to $31.02 billion in July compared to $26.18 billion in the previous month. The country's trade deficit stood at a record in June before the latest figures for July were released.
Talking to reporters, Subrahmanyam revealed that the latest data comes after the government raised import duty on gold last month for discouraging buyers in the world’s second-largest consumer and to rein in the yawning trade deficit.
With effect from July 1, the government has increased gold import duty to 12.5% from 7.5% - resulting in a hike of 5%. As per the Finance Ministry data, the gold imports stood at 107 tonnes of gold compared to 11 tonnes same period last year and in June also the imports have been significant. The surge in gold imports is putting pressure on the current account deficit.
As per the latest data, in June 2022, gold imports were valued at $2.611 billion compared to $969.02 million in June last year - registering a 169.45% growth.
He said, growing concerns about the gap and an exodus of foreign capital from Indian markets had pushed the rupee to a record low of 80.06 per dollar last month. The local unit has since rebounded amid a broad pick-up in appetite for riskier assets and currencies, as per a Bloomberg report.
Further, he pointed out that India’s export sector, one of the brighter spots in the economy in the aftermath of the Covid pandemic, is expected to come under strain amid worries of a slowdown in key markets like the United States and the European Union.
Between April - June 2022 quarter, India's trade deficit more than doubled to $70.25 billion from $31.42 billion in the corresponding period last year. In Q1FY23, the exports stood at $116.77 billion up by $95.54 billion in Q1FY22, while the imports jumped to $187.02 billion against $126.96 billion in Q1 last year, as per the Ministry of Commerce & Industry data released last month.
Milestone Alert!Livemint tops charts as the fastest growing news website in the world 🌏 Click here to know more.
