New Delhi: India’s exports declined 1.8% in December to $27.36 billion, on the back of currency volatility and fluctuation in commodities prices coupled with the sluggish global economy. Exports had declined 0.34% in November. Echoing the general economic sluggishness and weak domestic demand, imports witnessed a sharper decline of 8.83% at $38.61 billion in December.
This helped narrow down the trade deficit to $11.25 billion last month from $12.12 billion in November, data released by the commerce and industry ministry on Wednesday showed. Non-oil non-gold imports, an indicator of the strength of domestic demand, contracted more steeply at 12.2%. “The double-digit contraction sustained by non-oil, non-gold imports for three months in a row is a cause for concern,” said Aditi Nayar, principal economist at ICRA.
The decline was driven by industrial inputs such as iron and steel, coal, minerals and ores, and metals, transport equipment, electronic goods and silver. Oil imports contracted 0.83% to $10.69 billion, while gold imports dipped 3.93% to $2.46 billion. As for exports it was the fifth straight month of contraction. It is in line with the slowing Indian economy that is expected to grow at a 11-year low of 5% in 2019-20. “The currency volatility besides fluctuation in commodities prices including that of crude have also led to the decrease in exports of petroleum, which is a major constituent of India’s exports,” said Sharad Kumar Saraf, president of Federation of Indian Export Organisations (FIEO).
As many as 19 of the 30 exporting sectors reported a decline in outbound shipments last month. Electronic goods, drugs & pharmaceuticals, marine products, ready made garments and cotton yarn were the major commodity groups that showed growth, the commerce and industry ministry said. In April-December 2019-20, India’s exports shrank 1.96% on year to $239.29 billion while imports fell 8.9% to $357.39 billion, leaving a trade deficit of $118.1 billion. The trade deficit in December 2018 was $14.49 billion.
FIEO’s Saraf said domestic issues including uncertainty over the Merchandise Exports from India Scheme (MEIS) was a major cause of concern as exporters’ claims for over five months are still pending. This has further compounded the liquidity problem for exporters “as their GST and Drawback claims have also been held up”, he said.
Source: Economic Times