Indian exports rise 22.5 percent, deficit balloons to $16.64 bn

NEW DELHI - Though Indian exports rose for the 10th consecutive month in August, growing an annual 22.5 percent to $16.64 billion (Rs.77,509 crore), the trade deficit widened to a huge $56.62 billion, underlining the need to increase the country’s outbound sale of goods.

India is targeting a 15 percent growth in this fiscal’s exports at around $200 billion, having seen a 4.7 percent dip in 2009-10, owing to the global financial crisis.

The trade deficit for April-August, 2010 was estimated at $56.62 billion which was higher than the deficit of $40.27 billion during the previous corresponding period, according to the data released by the commerce ministry Friday.

Imports during August rose 32.2 percent at $29.67 billion (Rs.138,211 crore), resulting in a gap of $13.04 billion between exports and imports in the month, the data showed.

Cumulative value of exports increased 28.6 percent during first five months of 2010-11 at $85.27 billion compared to $66.3 billion in the same period last fiscal.

Value of imports for the period April-August rose 33.1 percent at $141.89 billion against $106.6 billion the likewise period in 2009-10.

“The rise in imports was driven by the increase in non-oil imports reflecting the outcome of the floods leading to an increased import of essential commodities,” said Shanto Ghosh, principal economist of Deloitte in India.

Recently, Commerce Secretary Rahul Khullar had expressed concern over the widening trade deficit, pegging it at around $135 billion. He, however, said for now this deficit was “within manageable limits and eminently financeable.”

“Can we continue financing a $135-billion trade deficit and for how long? We now need to do something very major to give our exports a further boost. The next challenge is to take our total exports from $200 billion to $400 billion,” Khullar had said.

Oil imports during August stood at $7.79 billion, 12.4 percent higher than oil imports valued at $6.93 billion in the corresponding month last year.

Non-oil imports during the month were estimated at $21.88 billion, was 41.1 percent higher than that in August, 2009.

The Federation of Indian Exporter Organisations (FIEO) attributed the continued growth in exports to the strategy of diversifying export destinations.

“Indias exporters are on course to realize the export target or even surpass it to reach $210 billion, said A. Sakthivel, president, FIEO.