Published October 12, 2012
India trade deficit at its highest in 16 months
US$18.1b shortfall due largely to 10.8% drop in exports
BT 20121012 INDIA12 208573
Box traffic: Europe's debt crisis has weighed on global growth and hurt demand for exports from emerging nations. - PHOTO: REUTERS
[NEW DELHI] India's trade deficit widened to the highest level in more than a year in September as a struggling world economy contributed to a drop in the nation's exports.
Merchandise shipments fell 10.8 per cent from a year earlier to US$23.7 billion, the Trade Ministry said yesterday as it released provisional figures. Imports rose 5.1 per cent to US$41.8 billion, leaving a deficit of US$18.1 billion. The shortfall is the highest in 16 months, based on historical government data released on April 19 and official monthly trade statements.
Europe's debt crisis has weighed on global growth and hurt demand for exports from emerging nations, prompting South Korea to cut interest rates yesterday, hours after Brazil, as officials try to avert deeper slowdowns.
Prime Minister Manmohan Singh overhauled Indian economic policy last month to help draw more investment from abroad and steady the rupee.
"These numbers are quite worrisome," said Shubhada Rao, chief economist at Yes Bank Ltd in Mumbai. "It's not good for the rupee and I expect these numbers will have a short-term impact on the currency."
Mr Singh's government started the policy revamp on Sept 13 by announcing a rise in diesel prices to curb expenditure on fuel subsidies, before opening industries from retail to aviation to more foreign investment the next day.
The rupee has strengthened 5.1 per cent against the dollar since the overhaul, paring its loss in the past year to 6.5 per cent. The currency advanced 0.6 per cent to 52.755 per dollar. The BSE India Sensitive Index rose 0.7 per cent.
Oil imports in September surged 30.7 per cent from a year earlier to US$14.09 billion, according to yesterday statement. Non-oil imports decreased 4.5 per cent to US$27.7 billion.
Indian gross domestic product growth may weaken to a decade-low of 4.9 per cent in 2012 even as the government pursues a policy revamp, International Monetary Fund estimates showed this week. - Bloomberg
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