Exports grow 34% in June, imports 43%

Trade deficit widens to $2.2 billion

India's exports registered a healthy growth of 34.32 per cent during the month of June at $5.67 billion against $4.22 billion a year ago.

Despite the growth in exports, the country's trade deficit during the month was higher at $2.2 billion from $1.3 billion last year, on account of a 43 per cent increase in imports.

Analysts expect exports to continue their growth momentum over the next few months on the back of rising global demands, but imports may slow down as a weak monsoon is seen hitting industrial output.

"Imports will see some slowdown at the start of 2005 if the rains continue at the current pace. But I expect exports to continue to grow as the outlook is bright," said Tapan Bhaumik, policy adviser at the Confederation of Indian Industry (CII).

According to the provisional data released by the Commerce and Industry Ministry today, export growth during the first quarter of the current fiscal was 28 per cent at $16.4 billion from $12.8 billion during April-June last year.

In rupee terms, exports during the first fiscal grew at 22.2 per cent over the corresponding period last year. The government has set an export target of 16 per cent for the current fiscal.

The annual June-September monsoon rains, the lifeline of Asia's fourth-largest economy, have been erratic so far and a drought-like situation is developing in large parts of the farm-dependent country despite floods in the east.

Rains are crucial as nearly 600 million of the country's over one billion population depend on the farm sector, which generates a quarter of the gross domestic product and is a crucial driver of demand.

Increased consumer demand after last year's bumper rains helped push non-oil imports, which signify industrial activity, up 25 per cent. India's imports during April-June 2004 has been valued at $22.4 billion, an increase of almost 31 per cent over the levels of $17.16 billion in the corresponding period a year ago.

Oil imports continued to increase during April-June 2004 registering a growth of 44.69 per cent at $6.6 billion compared to $ 4.5 billion in the same period last year.

Non-oil imports during the first three months of the fiscal was estimated at $15.81 million, 25.6 per cent higher than the level of such imports valued at $12.5 billion in April-June 2003-04.

"The export sector continues to be very robust and this reflects the strength of the global economy," said Prasenjit Basu, managing director of Robust Economic Analysis, Singapore.

"In the following quarters, we are likely to see even better numbers," he added.

Most analysts expect exports to surge towards the end of 2004, which is traditionally the peak season when manufacturers rush to meet Christmas orders to mostly Western countries.

Indian exports shrugged off the impact of a rising rupee last year and exceeded the 12 percent annual growth target, rising to $61.84 billion in the fiscal year ended March 2004.

India's new Congress-led coalition government has said it will aim to sustain double-digit export growth and meet the target of grabbing a one percent share of global trade.

The country currently has a paltry 0.7 percent share. The government has set an export growth target of 16 percent in the fiscal year to March 2005.

Growth momentum

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• Export growth during the first quarter of the fiscal was 28 per cent at $16.4 billion

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• Export target set at 16 per cent for the current fiscal

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• Imports during April-June 2004 are valued at $22.4 billion, an increase of 31%

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• Oil imports during April-June have grown by 44.69%