Watch the gap
Official data on India’s merchandise trade for April give reason for cheer at first glance. Emerging from a record export performance during the justconcluded financial year, outward shipments for the month rose 24.2% from a year earlier, with electronics and chemicals showing healthy expansion, while petroleum products more than doubled. However, imports continued to outpace exports, growing by 26.6% to broaden the goods trade deficit, which widened to $20.07 billion from $18.5 billion in March.
Reason for trade deficit
- Import bill dominated by petroleum- The extent to which the import bill exceeds export receipts worryingly breached $200 billion for a rolling 12month period for the first time in April, impacted predominantly by petroleum imports of $172 billion.
- Impact of Russia-Ukraine War- Global crude oil prices have surged by more than 40% in 2022 in the wake of Russia’s war on Ukraine, swelling the import bill.
- Coal Imports- The early onset of the Indian summer, with a heatwave, has bolstered power demand, setting the pace for coal imports, which grew 136% last month, notwithstanding record output by key domestic supplier Coal India.