Trade deficit widens to $16.3bn in Jan.

Trade deficit widens to $16.3bn in Jan.

Context:

According to the data released by the Commerce Ministry India’s goods trade deficit has widened to $16.30 billion in January 2018

Highlights:

• The goods trade deficit has widened to $16.30 billion in January 2018 from $9.9 billion in the same month a year ago and $14.88 billion in the previous month owing to imports outpacing exports
• The January trade deficit is a more than three-year high.
• Exports for January went up by 9.07% year-on-year to $24.38 billion.
• However, goods imports rose 26.1% to $40.68 billion.
• Exports have been on a positive trajectory since August 2016 to January 2018 with a dip of 1.1% in the month of October 2017

Imports and Exports:

• During the April-January 2017-18 period, trade deficit was $131.15 billion.
• Exports during April-January 2017-18 increased by 11.75% to $247.89 billion,
• However, imports during the 10-month period of the current fiscal registered a 22.21% growth to $379.05 billion.
• Oil and non-oil imports during January jumped by 42.64% and 20.49% to $11.65 billion and $29 billion, respectively
• Shipments of ready-made garments declined by 8.38% to $1.39 billion last month in January
• Shipments of chemicals, engineering goods and petroleum products grew by 33%, 15.77% and 39.5% in January
• Gold imports shrunk 22% to $1.59 billion.
• According to the data by the Reserve Bank, the exports in services in December 2017 were valued at $16 billion. The imports stood at $9.85 billion.

According to Federation of Indian Export Organisations (FIEO)

• Though exports in January 2018 witnessed positive growth for third time in a row, the rate of growth is declining on a month-on-month basis.
• Of export growth of about 9%, more than 6% has been contributed by petroleum products alone.
• Labour-intensive sectors like garments, carpets, handicrafts, man-made textiles are exhibiting negative growth primarily due to liquidity crunch emanating from blocking of funds in GST
• FIEO has estimated that the trade deficit in this fiscal will touch about $150 billion

Way Out:

• FIEO wants the government to look into the refund issues by undertaking a clearance drive so as to clear all cases by March 31, 2018.
• Alternatively, banks may be asked to finance exporters against the pending GST refund claims with interest to be borne by the government