(Reuters) – India posted its second highest ever monthly trade deficit of $20 billion in January as imports surged to record highs, piling pressure on a widening current account deficit and limiting scope for the central bank to cut interest rates.
Total Imports in USD terms
Exports rose an annual 0.8 percent to $25.59 billion in January, the first time they have risen since the start of the fiscal year in April last year, on the back of better sales of engineering goods, drugs and gems.
But imports rose 6 percent to $45.58 billion, according to a senior trade ministry official, their highest ever monthly total. Imports of oil, the single biggest item, rose 6.9 percent from a year ago to $15.9 billion.
“The oil import bill is definitely a challenge, but for a growing economy, energy needs have to be met,” Commerce and Industry Minister Anand Sharma told an industry conference in Mumbai.
The January trade deficit was the second worst on record. The worst figure was $20.9 billion posted in October.
Current account data for the October-December quarter will be released at the end of next month, but the deficit touched a record high in September at 5.4 percent of GDP due to slowing exports and heavy oil and gold imports.