Gold, silver, oil imports drop.
By R. Chandrasekaran
CHENNAI: There seems to be some good data for the policy makers to cheer over. For the first time in three months, exports have recorded growth in July, whereas imports, which outnumber exports being an import country, dipped probably due to the efforts taken by the government to control gold imports.
The stock markets, which were pining for some favorable data to bring back the sentiments from slumber, reacted positively thereby taking the Bombay Stock Exchange’s benchmark index above the psychological mark of 19,000 during the day’s trading before profit taking pulled back to close it below 19K level.
After recording two straight months of a fall in exports, July saw 11.64 percent upside in exports to $25.83 billion driven by demand from Africa, Far East and ASEAN regions.
However, imports dipped 6.2 percent to $38.1 billion. This suggested a trade deficit of $12.2 billion in July compared to $17.47 billion in the previous year. The primary reasons for the drop in imports are drop in gold and silver imports to $2.9 billion from $4.4 billion and oil imports bill by 8 percent to $12.7 billion. In April and May, imports of gold have hurt the trade deficit badly.
India’s Commerce Secretary S R Rao attributed the rise in exports to shipments in regions such as Africa, ASEAN and Far East.
As a result of growth in exports in July, total exports in the first fourth months of the current fiscal year rose 1.72 percent to $98.29 billion from $96.93 billion. Similarly, imports have also grown 2.82 percent to $160.74 billion from $156.33 billion.
Trade deficit has widened to $62.45 billion from $59.7 billion in the fourth months period of last year.
The July exports number should be a boost to the government, who are hoping to turn the tide in the face of a significant drop in the Indian currency thereby threatening the current account deficit to widen further.
The drop in imports is mainly due to the government’s initiatives to limit the imports in oil and gold. During a meeting with the captains of the industry, Prime Minister Manmohan Singh had urged the industry to limit import of coal, oil and gold. This seems to have paid off in July.
To contact the author, contact rchandrasekaran@americanbazaaronline.com