After helping India contain current account deficit in the fourth quarter of the previous financial year (2010-11), merchandise exports rose by 56.9 per cent annually to $25 billion in May.
Imports were also up by 54.08 per cent to $40.9 billion in May. Because of high imports, trade deficit rose to $15 billion, the highest since August 2008. Economists say the rising gap between exports and imports may continue for some time, and high exports and imports may not sustain for long term, due to signs of slowdown in some sectors of the economy.
Almost one-fourth of the total imports were accounted for by oil imports at $10.16 billion.
Whopping growth in exports along with net invisible surplus led to a dip in current account deficit to $5.4 billion in the January-March quarter of the last financial year from $12.8 billion a year ago. Merchandise exports grew by 47.1 per cent in the fourth quarter of 2010-11.
Total exports in the first two months (April-May) of the current financial year reached $49.8 billion, up 45.3 per cent over the same period in the previous financial year. Cumulative imports, on the other hand, rose 33.3 per cent to $73.7 billion, resulting in a total trade deficit of $24 billion.
High exports figure for May came as certain sectors of the economy, particularly interest rate-sensitive ones like auto, are showing signs of moderation.
“It is very difficult to connect the dots. The growth in exports and imports may come down as high economic growth anyway is unsustainable,” said D K Joshi, chief economist with ratings agency Crisil.
He also added that trade deficit might continue to be high in the coming months.
