As the trade deficit in May hit a record high of $24.3 billion, revenue authorities have now become vigilant, a senior government official told The Economic Times. The official ruled out any knee-jerk reaction from the authorities that could impact the nation's economic recovery.
"We are keeping a close watch... Officials have been asked to look at the import data," the official told ET and added that the CAD is an area of concern.
The authorities are closely watching the import of precious metals, especially gold. The imports of gold in May rose by almost nine times to $7.7 billion compared to a year ago. Silver imports in May rose to $556 million.
India has witnessed an increase in non-fuel imports, including electronic goods, leather goods, and textiles. In the past, India has imposed restrictions or raised custom tariffs to curtail such imports. However, such moves have led to slow economic growth.
In FY22, India's CAD showed a deficit of 1.2 per cent of GDP against a surplus of 0.9 per cent in FY21, while the trade imbalance widened to $189.5 billion from $102.2 a year ago. Fitch Ratings earlier in June estimated that the CAD could rise to 3.1 per cent of GDP in the current fiscal year as the finance ministry had also flagged the issue in its monthly report.
The ministry said, "India faces near-term challenges in managing its fiscal deficit, sustaining economic growth, reining in inflation, and containing the current account deficit while maintaining a fair value of the Indian currency."