India’s merchandise trade deficit narrows to $11.01 billion

A sharp fall in import of petroleum products reduced India’s October merchandise trade deficit to $11.01 billion from $18 billion reported for the corresponding period of 2018.

Similarly, global slowdown amidst weak domestic demand dipped India’s merchandise exports on a year-on-year basis.

As per the data furnished by the Ministry of Commerce & Industry, October exports were marginally down to $26.38 billion from $26.67 billion reported for the corresponding period of the previous year.

However, on a sequential basis, exports were higher than $26.03 billion worth of merchandise that were shipped out in September.

The data showed that shipment of ‘electronic goods’ grew by 38.42 per cent, followed by other categories such as ‘drugs and pharmaceuticals’, ‘gems and jewellery’, ‘engineering goods’ and ‘organic and inorganic chemicals’.

“Non-petroleum and non-gems and jewellery exports in October were $19.04 billion, as compared to $18.93 billion in October 2018, exhibiting a positive growth of 0.59 per cent,” the ministry said in a statement.

On the other hand, imports declined by 16.31 per cent to $37.39 billion in October from $44.68 billion reported for the corresponding month of 2018. “Oil imports in October 2019 were $9.63 billion, which was 31.74 per cent lower in dollar terms, compared to $14.11 billion in October 2018,” the ministry said.

“Non-oil imports in October 2019 were estimated at $27.76 billion which was 9.19 per cent lower in dollar terms, compared to $30.57 billion in October 2018.”

The data revealed a drastic fall in the inbound shipments of ‘petroleum, crude and products’ by 31.74 per cent, followed by ‘coal, coke and briquettes, etc.’, ‘transport equipment’, ‘electronic goods’ and ‘machinery, electrical and non-electrical’.

Non-oil and non-gold imports declined by 10.04 per cent to $25.92 billion in October 2019 from $28.82 billion in October 2018.

Consequently, the trade deficit in October narrowed to $11.01 billion on a year-on-year basis.

“The sharp slide in the merchandise trade deficit in October 2019 relative to October 2018 was primarily driven by a considerable reduction in imports of petroleum products, led by both prices and volumes, as well as various industrial inputs, and some consumer items,” said Aditi Nayar, Principal Economist, ICRA.

“Non-oil, non-gold merchandise imports recorded a substantial 10 per cent reduction in October 2019, driven by a variety of items, including industrial inputs such as iron and steel, coal, minerals and ores, and metals, as well as items such as transport equipment, electronic goods, silver and precious and semi precious stones.”

Engineering Export Promotion Council (EEPC) India Chairman Ravi Sehgal said: “Negative exports for October,2019 have not come as a surprise, amidst global slowdown, particularly in the main destinations of Indian exports.

“However, the pace of de-growth for October has come down, month-on-month, while engineering exports have recorded a marginal growth as well.”

Overall, the picture remains challenging, he said, urging the government and the RBI to take measures to improve competitiveness of Indian exports.

Meanwhile the consumer spending in India has slumped for the first time in four decades, a leading business daily reported, bringing more bad news for Prime Minister Narendra Modi as he struggles to revive a stuttering economy.

Consumer demand in India’s villages fell 8.8 per cent between July 2017 and June 2018, compared with 2011-12, the Business Standard reported, using unpublished National Statistical Office (NSO) data.

Two-thirds of India’s 1.3 billion population lives in rural areas, making it a key economic driver. But spending on food, education and clothing declined, with demand for essential items such as cereals plunging 20 per cent, the newspaper stated.

Although urban consumption rose by two per cent, overall per capita monthly spending in the country slipped 3.7 per cent _ the first time it has fallen since 1972-73, the business daily said.

The report should have been released in June, but was pushed back because of its “adverse” findings, the Business Standard said, citing sources familiar with the matter.

“The NSO report is still under processing and not validated, and many officials are not privy to the data,” said AK Mishra of the ministry of statistics.

The data “can only be confirmed once the ministry publishes the report”, Mishra said.

Agencies