With crude oil and gold alone accounting for over 44 per cent of total import bill of USD 489 billion and exports losing steam mid-way, India ended the fiscal 2011-12 with the highest ever trade deficit of USD 185 billion causing a "serious" challenge for the economy.
Exports touched USD 303.7 billion for the previous fiscal registering 21 per cent expansion. However, exports fell in March by seven per cent to USD 28.7 billion.
Imports for the month aggregated USD 42.6 billion leaving a trade gap of USD 13.9 billion, according to data released by Commerce Secretary Rahul Khullar today.
The situation on widening trade deficit can go worse in the current fiscal, Khullar said adding exports would need to grow 28 per cent to maintain even the present position.
"If balance of trade (BoT) is to stay exactly where it was, my exports need to grow by 28 per cent and that is impossible,we cannot do that...where are we going to drum up 25-30 per cent growth,"? he asked. While there are signs of recovery in the US, Europe is not doing well.
The highest ever BoT remains an area of concern for the Reserve Bank as well. "The financing of the current account deficit will continue to pose a major challenge," RBI said in its credit policy review on April 17.
Going forward, Khullar, however,was pinning hopes on "tempered" demand for oil and gold in the wake of rising prices. Prices of these two commodities are not expected to rise in the current yeas as fast as in 2011-12, he said.
While gold and silver imports grew by 44.4 per cent year - on-year to USD 61.5 billion, crude oil imports went up by 46.9 per cent to USD 155.6 billion in 2011-12.
Khullar said exports growth for the entire was "somehow managed"
However, 2012-13 would again be a difficult year, he cautioned. He said early policy decisions on coal, fertiliser and edible oil are needed in the wake of rising import bill on these heads.
During 2011-12, coal, fertiliser and edible oil imports grew by 80.3 per cent, 59 per cent and 47.5 per cent to USD 17.6 billion, USD 11 billion and USD 9.7 billion respectively.
"Coal imports expanded significantly. Now it requires decision on the domestic policy front in terms of coal production. Similarly edible oil, fertiliser imports have expanded significantly and these require domestic policy decisions," he added.
From a peak of 82 per cent in