India Exports Jump 30%, Trade Deficit at $13.8b

The  goods and services tax council’s efforts to resolve exporters’ woes on refunds seem to have started yielding results. Exports grew 30.55% in November, a month after it contracted 1.1%, also due to the low base effect and rising petroleum prices. In fact, petroleum products, along with engineering goods, gems and jewelry, and chemicals, drove nearly 80% of the rise in merchandise exports.

The outbound shipment stood at $26.19 billion in November against $20.06 billion a year ago. To put things in context, exports had declined by 24.43% in November 2016, the steepest that year, news outlets reported.

Exports rose 12.01% at $196.48 billion during the first 11 months of the current financial year. But exporters complained that their funds were still stuck and demanded government intervention to address their concerns including issues related to GST.

In November, imports were also rose to a three-month high of 19.6% to touch $40.02 billion. This was attributed mostly to around 40% surge in oil imports.

As a result, the trade deficit was pegged at $13.82 billion in November, slightly lower than the 35-month high of $14 billion in the previous month. This may pressure current account deficit, which includes balance in services as well. The CAD stood at 1.2% of GDP in the second quarter, lower than 2.4% in Q1.

Non-oil, non-gold imports, taken as an indicator of industrial health, increased by 22.6% at $27.21 billion in November. Growth was significantly high compared to 4.9% in October. This meant industrial recovery may be round the corner. The index of industrial production growth slowed to 2.2% in October from 4.14% in September.

Meanwhile, central bank governor, Urjit Patel, has said that India’s economy is showing signs of revival and an earlier slowdown is bottoming out. “Our recent growth numbers may have disappointed some in the first quarter of this fiscal year,” Patel said during a speech last week, “but the second quarter has recorded an uptick and the slowdown may well be bottoming out,” Reuters reported.

While India’s economic growth rose 6.3% in the July-September quarter, it was far below the 8% required to provide jobs to millions of people every year.

The governor also said that India’s current account deficit remained at sustainable levels. India’s July-September current account deficit widened to 1.2% of gross domestic product, or $7.2 billion, more than doubling from a year earlier, according to data from the Reserve Bank of India.