Maintaining the growth momentum, Indian exports grew by 56.9% to $25.9 billion in May compared to the same month last year. However, imports shot up by 54.1% to $40.9 billion thereby pushing up the trade deficit to $15 billion. Commerce minister Anand Sharma expressed concern on the rising trade deficit. ?It is a matter of concern. It is because of the volatility in petroleum prices. The oil prices have skyrocketed because of number of factors including the developments of last few months in middle east,? Sharma said.
According to the commerce secretary Rahul Khullar, the imports have reached the ?highest? in the last four years. ?There is a continuation of good run of exports but the high deficit figure is one of the first signs of not an easy summer,? Khullar said.
Meanwhile, during the April-May period the exports increased by 45.3% to $49.8 billion and imports grew by 33.3% to $73.7 billion. Commerce minister Anand Sharma said that the ministry is happy to see a consistent and continuing growth trend but it has asked the DGFT to undertake a sectoral review which will submit its report in the next 45 days. The minister said that India being a major importer of petroleum products, the situation needs to be carefully watched. The country?s petroleum and oil lubricants (POL) imports in May increased by 18% to $10.16 billion.
The Federation of Indian Export Organisation?s (FIEO) too said that the high trade deficit of $15 billion is a cause of concern and that domestic manufacturing should be encouraged to raise output.
Commerce secretary Khullar said that the trade deficit figure is largest since August 2008. Hoping that it is a one of event, he said: ?We will be watching the deficit figures for another two three months. This is a time to put red flag but not to ring an alarm bell?.
He also said that the exports growth is led by the shifting trends in the export basket with engineering goods export shooting by 120% on a y-o-y basis at $7.9 billion, petroleum products up by 75% at $4.5 billion, ready made garments up at $1.3 billion by 51% and electronic goods up by 117% at $1.03 billion.
India?s exports showed a robust annual growth of 34.4% to $23.9 billion in April, but exporters are not sure whether the trend can be sustained in the wake of uncertainties in the global markets. Crisil chief economist DK Joshi said the exports growth momentum of 30-35% can not be sustained and there would be moderation in the months to come.
FIEO president Ramu Deora also said that the exports jump by 57 % in May is a sign of robust global scenario particularly in advanced economies coupled with effective government initiative. ?However, if stability of the policies is maintained and credit cost is lowered, we will cross this year target as well. Trade deficit of $15 billion is serious and a cause of concern and domestic manufacturing should be encouraged to offset huge deficit and government should provide level playing field to industry,? he added.
