You are here: Home » Economy & Policy » News
Business Standard

Soaring imports to push India's CAD to 1.9% this fiscal year : Report

Trade deficit--the difference between a country's imports and exports -- has been rising and remains sticky

imports | India imports | India trade

Press Trust of India  |  Mumbai 

imports, exports, retailers

Following the record USD 23.27 billion trade deficit in November, a foreign brokerage has increased its current account deficit (CAD) forecast to 1.9 per cent of GDP at USD 60 billion for 2021-22 as compared to USD 45 billion earlier.

The government released the trade data on Wednesday which showed that exports rose 26.5 per cent year-on-year to USD 29.88 billion last month, while soared 57.2 per cent to USD 53.15 billion, leaving a trade deficit of USD 23.27 billion.

Trade deficit--the difference between a country's and exports -- has been rising and remains sticky, driven by weaker exports, surging domestic activity and higher commodity prices, a Barclays report said.

While recent correction in crude prices may mildly support deficit trends, a sustainable merchandise deficit level on an average basis is around USD 16-17 billion per month for the country, which can keep the CAD closer to a sustainable range of 2 per cent.

But at the current pace, CAD on an annualised basis is running closer to 3 per cent. "Accounting for some of reductions in the near-term, we raise our CAD forecast to USD 60 billion (from USD 45 billion earlier), or 1.9 per cent of GDP this fiscal," the report said.

Exports in April-November 2021 stood at USD 262.46 billion, an increase of 50.71 per cent from the same period of 2020. On the other hand, grew 75.39 per cent to USD 384.44 billion, taking the trade deficit to USD 121.98 billion during the eight-month period of this fiscal year.

In November, trade deficit more than doubled to USD 23.27 billion as gold imports grew about 8 per cent to USD 4.22 billion and other inbound shipments like crude surged 132.44 per cent to USD 14.68 billion.

The record high trade deficit in November is largely due to weaker exports, but also partly on account of ongoing strength in imports, which have remained elevated for three straight months, Barclays said and noted that exports moderated materially to USD 29.88 billion last month.

The report attributed the higher import bill of USD 53.2 billion to the elevated commodity prices and recovering domestic demand.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Thu, December 02 2021. 20:12 IST