India revises up trade gap estimate as exports struggle

NEW DELHI Fri Mar 9, 2012 1:02pm IST

A worker climbs a container to release the crane clamp after it was loaded onto a supply truck at Thar Dry Port in Sanand, in Gujarat October 3, 2011. REUTERS/Amit Dave/Files

A worker climbs a container to release the crane clamp after it was loaded onto a supply truck at Thar Dry Port in Sanand, in Gujarat October 3, 2011.

Credit: Reuters/Amit Dave/Files

Related Topics

NEW DELHI (Reuters) - Indian imports continued to outpace exports in February as demand remained weak in major exports markets like the United States and Europe, nudging the government to revise up the full-year trade deficit projections on Friday.

A widening trade deficit will likely worsen India's current account deficit and further weaken the rupee.

Merchandise exports grew an annual 4.3 percent to $24.6 billion in February, while imports grew 20.6 percent to $39.8 billion, Trade Secretary Rahul Khullar said on Friday, citing provisional trade data.

The trade deficit widened to $15.2 billion during the month, from $14.8 billion in January.

With exports struggling to maintain the growth rate seen between April and September, Khullar revised up trade deficit projection for the fiscal year ending on March 31 to $175 to $180 billion from an earlier estimate of $160 billion.

"Over the last five months...there has been a very large ballooning of the balance of trade deficit," he said.

The trade deficit was $104 billion in the last fiscal year.

Exports reached $267.4 billion between April and February -- bolstered by demand for engineering goods, petroleum products and pharmaceuticals -- compared with the full-year target of $300 billion.

As demand in major export markets remain weak, the full-year figure is expected to be little short of the target.

"You are within striking distance of $300 billion, but you might not actually make it," Khullar said, estimating the total merchandise exports for 2011/12 to be in the range of $292-$298 billion.

Last month Khullar had projected the current account deficit to reach 3.5 percent of GDP this fiscal year, its worst in at least eight years, as the full-year trade shortfall was seen at $160 billion.

With the government revising up the shortfall figure, the current account deficit is also likely to widen further.

The deterioration in the current account deficit could pile pressure on the rupee, which fell nearly 16 percent against the U.S. dollar in 2011 before recovering this year, making it more reliant on volatile capital inflows to fund the gap.

(Writing by Rajesh Kumar Singh; editing by Malini Menon)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Markets

REUTERS SHOWCASE

Segway in India

Segway in India

Segway’s India business pegs hope on tech-savvy Modi  Full Article 

Power Outage

Power Outage

Mumbai hit by power cuts  Full Article 

Commodities

Commodities

Gold imports, premiums to jump on festive demand - top refiner  Full Article 

Economic Worries

Economic Worries

Pakistan's promises to IMF in doubt as protests sap economy   Full Article 

Islamic Finance

Islamic Finance

Basel III deposit challenge looms over Islamic banks   Full Article 

Antitrust Probes

Antitrust Probes

U.S. business lobby says concerned China antitrust probes unfair.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage