Trade deficit widens to $13 bn 

Trade deficit widens to $13 bn

(Imports climb 19% in June, exports see slower growth)

Context Trade deficit widened to $ 12.95 billion, according to the data released by the Commerce Ministry on Friday.

Introduction

• With goods imports outpacing exports in June, trade deficit for the month widened to $12.95 billion. In June 2016, the goods deficit was only $8.1 billion.
• Continuing with growth indicated since September 2016, goods exports in June 2017 rose 4.39% year –on-year to $ 23.56 billion.
• However, imports in June jumped 19% to $36.5 billion.

Commodity imports showing high growth

• Major commodity group of imports showing high growth in June were petroleum, crude and products (12.04%), electronic goods (24.22%), pearls, precious and semi-precious stones(86.31%), machinery, electrical and non-electrical (7.02%) and gold(102.99%).

Implications

• After showing a robust trend, India’s export basket is showing sign of muted growth, though the engineering sector has maintained its vibrancy in June.
• The currency impact in terms of stronger rupee hurting the exports is clearly visible in the form of shipments showing a negative growth, measured in Indian rupees.
• Unabated global liquidity flows into Indian financial markets are casting a shadow on the competitiveness of Indian exports.