India's exports in shocking 13.6% fall in January, 14th straight decline...

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India's exports drop 13.6% in January to $21 billion in 14th straight fall - The Economic Times

India's exports drop 13.6% in January to $21 billion in 14th straight fall

NEW DELHI: India's exports in January fell 13.6% from a year earlier to $21.07 billion - declining for the 14th consecutive month - while a contraction in imports narrowed the trade gap to an 11-month low.

Imports fell 11% to $28.71 billion, leaving a trade deficit of $7.63 billion, provisional data released by the ministry of commerce & industry showed.

The last time the gap was lower was in February 2015 at $6.84 billion.

Gold imports rose 85% to $2.91 billion last month compared with a 179% increase in December.

Oil meal exports posted the steepest decline at 77.5%, while petroleum product shipments fell 35.18%. Of the 30 export sectors, 13 registered growth amid subdued global demand and softening commodity prices. "The trend of falling exports is in tandem with other major world economies," the ministry said in a statement.

China's exports dropped 11.2% on year to $177.5 billion in January while imports plummeted 18.8% to $114.2 billion.

In the first 10 months of the current financial year, India's exports were $217.67 billion compared with $264.32 billion in the same period last year.

"At this rate, total exports will be in the $260-265 billion range. Fall in import of capital goods and raw materials is not a good sign for industrial recovery. SMEs will not have wherewithal to retain labour and in such a case, job losses become imminent," said Ajay Sahai, Director General of Federation of Indian Export Organisations.

"Overvaluation of the rupee, after adjusting against domestic retail inflation, is also eating into competitiveness of Indian exports. The fall in engineering exports by over 27% for January will have a negative impact on jobs as well since the sector is dominated by SMEs with large number of employment," said Engineering Export Promotion Council of India chairman TS Bhasin.

Oil imports dropped 39% to $5.02 billion while non-oil imports declined 1.4% to $23.68 billion. Non-oil, non-gold imports, seen as a measure of domestic demand, fell 7.4% to $20.78 billion.

"The seasonal uptick in gold imports was partly advanced in the current year with the fall in prices in rupee terms during the second quarter of FY16, which led to a 19% shrinking in the value of gold imports on a year-on-year basis in the third quarter of FY16," said Aditi Nayar, a senior economist at ICRA Ltd. "Benefiting from this, ICRA expects current account deficit to halve in the third quarter as compared to the $8.2 billion in the third quarter of FY15."

 

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India's retail inflation hits 17-month high, industrial output falls again| Reuters

India's retail inflation unexpectedly edged up to a 17-month high in January, while industrial production contracted at a faster-than-expected pace in December, underscoring imbalances lurking in Asia's third-largest economy.

Retail prices rose 5.69 percent on year in January, their fastest pace since August 2014, government data showed on Friday. The rise compared with a 5.4 percent increase predicted by analysts in a Reuters poll and a 5.61 percent annual gain in December.

Output at factories, utilities and mines shrank an annual 1.3 percent in December, another release showed, steeper than 0.1 percent fall forecast by economists surveyed by Reuters. The contraction, however, was smaller than a revised 3.4 percent fall in November.

Data shows no let-up in food inflation. Retail food prices were up 6.85 percent on the year in January, compared to 6.40 percent in December.

With the government set to hike salaries and pensions of its employees later this year, demand-driven price pressures are likely to get a boost.

That could make it tougher for the central bank to tamp down retail inflation to 5 percent by March 2017, diminishing hopes for further rate cuts.

"We think that the window for further easing ... has shut," said Mark Williams, chief Asia economist at Capital Economics, after the data release.

The Reserve Bank of India (RBI) kept its policy rate on hold at 6.75 percent earlier this month. Williams expects the central bank to keep rates unchanged throughout 2016.

IMBALANCES

Friday's data comes days after the economy posted growth of 7.3 percent in the quarter through December, faster than the 6.8 percent growth posted by China in the same quarter.

The data had shown consumption outpacing investments, signalling potential inflationary risks.

Industrial output data further underscored that risk as capital goods production, a proxy for investments, fell nearly 20 percent year-on-year in December.

It piles pressure on Finance Minister Arun Jaitley to unveil measures when he presents the federal budget on Feb. 29 to revive private investments, which have been dormant for the past four years.

His strategy to stimulate corporate spending through debt-fuelled higher public investment has yet to bear fruits.

Jaitley is under pressure to relax fiscal deficit targets in the budget and ramp up public spending to give the economy more momentum.

But RBI Governor Raghuram Rajan has cautioned against straying from fiscal consolidation, saying the move would jeopardise the country's economic stability at a time of global market turmoil.

(Reporting by Rajesh Kumar Singh; Editing by Douglas Busvine and Katharine Houreld)