India’s Trade Deficit at Record High of $31.46 Billion, Imports Shoot Up by 12.3%

beijingwalker · Nov 18, 2023

India’s Trade Deficit at Record High of $31.46 Billion, Imports Shoot Up by 12.3%

Exports that have grown by only 6.2%. Government cites it as example of “green shoots stabilising”. Gold purchase up by 95%.

16/NOV/2023

New Delhi: India’s merchandise trade deficit in October has shot up to record levels.
This was unveiled by union government officials yesterday, reports Reuters.

The trade deficit widened to $31.46 billion last month, much higher than economists’ expectation of $20.50 billion. The expectation was as measured earlier by a Reuters poll.

Merchandise exports were at $33.57 billion. India’s imports zoomed up to $65.03 billion, compared with exports of $31.60 billion and imports of $57.91 billion in October last year, as per government data.

Livemint cites a commerce ministry official as saying that gold imports rose by 95% on an annual basis during October, which led to the ballooning of the trade deficit. In October gold imports totalled $7.23 billion, Reuters had reported. While Diwali and the ‘festival season’ is being cited as the reason for the demand for gold surging, demand for the yellow metal is also an expression of economic sentiment being subdued, as people prefer bullion to other financial instruments.

Imports shoot up, but government says ‘green shoots stabilising’

Imports rose at the fastest pace (12.3%) in 13 months to $65.03 billion, far outpacing the growth in merchandise exports, (6.2%) in 11 months to $33.6 billion in October.

The government wants the focus to stay on rising exports alone, and on blaming international headwinds, but the story of Indian exports has been one of concern.

Business Standard cited the commerce secretary, Sunil Barthwal as saying the government believed that the October data was a signal towards the “stabilising” of green shoots. “The greenshoots that we have talked about during the August data are now stabilising (and) we are hopeful that we will be crossing last year’s high figures,” Barthwal is reported as saying.

Atmanirbhar?

The Atmanirbhar slogan of the government of India notwithstanding, in the last financial year, trade with China has also zoomed, imports, mainly, though US is the largest trading partner. As The Wire reported in April 2023, according to provisional data from the commerce ministry, India’s exports to China dipped by about 28% to $15.32 billion in 2022-23, while imports rose by 4.16% to $98.51 billion in the last fiscal. The trade gap widened to a record high of $83.2 billion in FY23 as against $72.91 billion in 2021-22.

Due to plummeting exports, India’s bilateral trade with China showed a minor dip of about 1.5% to $113.83 billion as against $115.42 billion in 2021-22. This meant that the US emerged as India’s biggest trading partner in FY23 with a bilateral trade of $128.55 billion, as per the provisional data.

As per The Hindu, during the April-October period of this fiscal year, exports contracted by 7% to $244.89 billion. Imports during the seven-month period fell by 8.95% to $391.96 billion.