The country's trade deficit widened yet again, to $9.7 billion (Rs 43,500 crore) in October, compared to $9.12 billion in the earlier month. Also, after a span of three to four years, merchandise exports have surpassed the growth rate of imports in the same month.
While exports rose to $18 billion, up 21.3 per cent compared to last year, imports grew by 6.8 per cent to $27.7 billion in October.
While releasing the initial export numbers, Union commerce secretary Rahul Khullar said the government might now look at withdrawing the several incentives given to exporters in a gradual manner.
During April-October, exports reached $121.4 billion, a 26.8 per cent growth, while imports were $194.2 billion, a growth of 26 per cent, resulting in a total trade deficit of $72.8 billion.
Khullar said if the trade deficit for the entire financial year was within a $125-135 billion range, there wouldn't be much concern. "I will be concerned if it goes beyond $135 billion," he said.
Earlier, finance minister Pranab Mukherjee said exports continue to remain robust, though below the pre-crisis level, when the average growth rate was 15-20 per cent.
"Weakness in the dollar and higher GDP growth rate differentials will be likely to continue to drive capital flows supporting the rupee, but a rising current account deficit and intervention by the Reserve Bank of India may cap the rupee's upward movement against the dollar," Tushar Poddar, vice president and chief economist, Goldman Sachs India, said in a note.
Some items like engineering goods, gems and jewellery, chemicals and petroleum products registered positive growth in the first seven months of the financial year, the commerce secretary said. But export of tea, tobacco, cashew and handicrafts continued to remain sluggish.
Exports of engineering goods increased 41.4 per cent, gems and jewellery increased 21 per cent, petroleum products 57 per cent and pharmaceuticals 14 per cent in the first seven months of the financial year.
Imports of petroleum products increased by 24.5 per cent in April-October, while that of gems and jewellery grew by 96 per cent. Gold imports were up 20 per cent, iron and steel by 53 per cent and vegetable oils by 49 per cent.
"The momentum given to exports in the past few months needs further push in view of the fragile market condition in the second half of the financial year. The growth in export is primarily due to overall improvement in the export scenario across products, barring a few," said A Sakthivel, president, President, Federation of Indian Export Organisations.
