Trade deficit hits record high on surge in gold imports
Tue Dec 17 2024
New Delhi: India’s trade deficit jumped to record high of $37.84 billion in November as festive and marriage-related demand for gold pushed import bills to an all-time high while the country’s outbound shipments declined, official data showed on Monday
There was a record import of gold during the month of November, at $14.8 billion. “Such high levels of gold imports were likely driven by festive and marriage-related
demand,” said Aditi Nayar, Chief Economist at Icra Ltd
November’s import bill soared to an all-time high of $69.95 billion, which is
27 per cent higher when compared with the same month last year. This is the
third time in four
months that import has hit a record high. In October it touched a then high of $66.34 billion.
On the other hand, after a surprise 17.3 per cent year-on-year jump in October,
the country’s exports posted a decline of 4.83 per cent in November. The value
of
merchandise exports declined to $32.11 billion, lower on a year-on-year as well as on a month-on-month basis.
“An unprecedented fall in petroleum products prices has pulled down goods
exports in November," Commerce Secretary Sunil Barthwal told reporters. He
pointed out
that non-petroleum exports have grown at a comfortable pace.
A higher trade deficit is likely to put further pressure on the rupee, which
has weakened by nearly 2 per cent against the US dollar since the beginning of
2024. Nayar
said the latest adverse trade deficit print would result in a sharper-than-expected widening in India’s current account deficit in October-December quarter to 2.8 per cent
of GDP as against earlier expectations of 2 per cent.
The ongoing international trade disruptions, along with the volatility in crude
and metal prices have also played a key role in the declining value of exports
to some extent,
said Federation of Indian Export Organisations (FIEO) President Ashwani Kumar.
“The rising tensions between Israel-Iran has continuously led to logistical
challenges with regard to international trade getting impacted as most of our
trade to Europe,
Africa, Africa, CIS and Gulf region are happening through the Red Sea route or the gulf region prompting buyers to have little large inventories,” Kumar said.
The value of India’s total exports (merchandise and services combined) for
November stood at $67.79 billion, which is 9.59 per cent higher when compared
with the same
month last year. This was due to a healthy increase in services exports.
Source: https://www.deccanherald.com