In yet another sign of economic revival, India’s merchandise exports grew by 5.4 per cent in January to $27.24 billion. This was the second consecutive month of growth, similar to imports, which grew 2.07 per cent during the month.
Trade deficit — at $14.75 billion in January — remained largely unchanged from a month ago, according to preliminary data released by the department of commerce and industry.
While higher exports could mean a recovering global economy and improved domestic production, rising trade deficit suggests that consumption is reviving in the country.
“Rise in both merchandise exports and imports in January 2021 is heartening, signifying a continued strengthening of the domestic growth recovery. With the merchandise trade deficit having risen to $14-15 billion over the last two months, we expect the current account balance to slip back into a deficit in H2FY of 2021,” said Aditi Nayar, principal economist at ICRA, in a note.
But granular data shows the areas where growth has picked up and those where sluggishness still exists. For example, petroleum exports and imports still remain in a strong contraction zone compared to a year ago.
Exports, excluding oil and oil products at $25.24 billion, were 11.37 per cent more in January than a year ago. Exports, excluding oil, gems and jewellery, grew 13.21 per cent. Non-oil imports (15.8 per cent), too, grew faster than overall imports (2.07 per cent).
Textiles and leather are livelihood-creating labour and export-intensive industries, providing jobs to a sizable proportion of the country’s labour force. These exports rose the slowest in January. Exports of engineering goods, pharma products and iron ore, on the other hand, rose the fastest.
Import of capital goods still shows signs of distress as transport equipment and project goods imports fell 25.2 per cent and 62.2 per cent, respectively, in the first month of 2021.
Trade institutions welcomed the positive trend visible in the preliminary data. “Among categories in commodity exports that recorded positive growth during January 2021 are cereals, oil meals and miscellaneous processed items as well as jute. This shows that the agri and processed food industries are the engines of this demand-driven growth and I am hopeful that this momentum is going to continue,” said Trade Promotion Council of India (TPCI) chairman Mohit Singla.
With inputs from PTI