Business Standard

Dec exports up 6.7%

But trade deficit balloons up govt reiterates 2012 will be tough

BS Reporter  |  New Delhi 

Exports in December grew just 6.7 per cent to $25 billion from $23.4 bn in December 2010, in the backdrop of a crisis in the euro zone and sluggish recovery in America, the two main markets for the bulk of outbound shipments.

However, the growth in December was higher than in November, when it rose only 3.9 per cent year-on-year, according to the provisional numbers released by commerce secretary Rahul Khullar, even as he underlined that exports could get “close to” the $300 bn target for 2011-12.

Imports grew 19.8 per cent to $37.8 bn, compared to $31.5 bn in December 2010, taking the trade deficit to $12.8 bn. Exports during April-December were $217.6 bn, while imports reached $351 bn, pushing the cumulative trade deficit in the period to $133.3 bn.

“Imports are rising due to two things. One is because domestic consumption is high, so demand is growing. Second, imports are rising as intermediary inputs for exports…My guess is, we could reach a trade deficit for this fiscal within $155-160 bn (or) it could be more by the end of this fiscal,” Khullar said while releasing the initial numbers for December here on Monday. These numbers are expected to be revised when the official data gets released on February 1.
 

SNAPSHOT
Month Exports Imports  Trade deficit
April-Dec 2011  $217.6 bn $351 bn $133.3 bn
Dec-11 $25 bn $37.8 bn $12.8 bn
Year-on-year growth (%) 6.7 19.8 NA

With the slowing demand from Europe and the US, exports had been decelerating from July till November. However, December indicated slight recovery. The month-on-month growth rate of exports from July to August, August to September, September to October and October to November were (all negative) 7.9 per cent, 3.7 per cent, 5.1 per cent and one per cent. For November to December, it was a positive 12 per cent, said Khullar.

He said some of the sectors that did significantly well during the nine months from April through December were engineering, petroleum products, gems and jewellery, textiles, drugs and pharmaceuticals, and electronics. “With three months to go, we will be able to achieve $280 bn (export) in 2011-12,” said M. Rafeeque Ahmed, president, Federation of Indian Export Organisations. He said the rising trade deficit was also a “deep cause of concern, as it is likely to swell the import bills in rupees, having adverse effect on inflation”.

According to a research note by Moody’s Analytics, despite depreciation of the rupee, exports have faltered. This is mainly due to the crisis in the European market and the downward trend is likely to continue in the near term, as European demand remains weak.

“If 2011 was hard, 2012 is going to be harder. There are too many uncertainties. There may be some green shoots here and there but we have also seen earlier that green shoots are not growing up,” added Khullar.

First Published: Tue, January 17 2012. 00:17 IST
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