April exports shrink 14% in fifth straight monthly dip
Raising fresh concerns about economic growth, India’s exports contracted by about 14 <g data-gr-id="42">per cent</g> in April to $22 billion due to a sharp dip in petroleum, gems and <g data-gr-id="41">jewelery</g> shipments, registering decline for the fifth straight month. The slump in exports is mainly due to <g data-gr-id="33">global</g> slowdown and softening of crude, metal and commodity prices.
In April 2014, the country’s merchandise exports stood at $25.63 billion. The last time exports registered positive growth was in November last year when 7.27 <g data-gr-id="34">per cent</g> expansion was recorded. The main exporting sectors, including petroleum products (-46.5 <g data-gr-id="37">per cent</g>), gems and <g data-gr-id="35">jewelery</g> (-10 <g data-gr-id="38">per cent</g>) and man-made yarn and fabrics (-8.3 <g data-gr-id="39">per cent</g>), reported negative growth in April.
“The prime reason continues to be softening of crude, metal and commodity prices. Equally worrying is negative growth in gems & jewellery, electronics and plastic goods,” Federation of Indian Export Organisations (FIEO said). Imports too declined by 7.48 <g data-gr-id="48">per cent</g> to $33 billion, leaving a trade deficit of $11 billion in the month under review, according to the data released by the commerce ministry.
Oil imports dipped 42.65 per cent during April to $7.44 billion. Non-oil imports grew by 12.58 <g data-gr-id="49">per cent</g> to $25.6 billion. Gold imports surged by 78.33 <g data-gr-id="50">per cent</g> to $3.13 billion as against $1.75 billion in the month under review. In March, country’s exports contracted by 21 <g data-gr-id="51">per cent</g>, the biggest fall in the last six years. India had missed the annual exports of <g data-gr-id="47">target</g> of $340 billion for 2014-15. Last year, exports stood at $310.5 billion.
However, gold imports surged by 78.33 per cent year-on-year to $3.13 billion in April on declining prices and easing of restrictions by the RBI. Imports of the precious metal stood at $1.75 billion in the same month of 2014. In March, imports grew 94 <g data-gr-id="32">per cent</g> to $4.98 billion. Any increase in gold imports impacts the current account deficit (CAD).
The CAD in the first half of last (<g data-gr-id="44">rpt</g>) last fiscal declined to 1.9 per cent of GDP ($18 billion) from 3.1 <g data-gr-id="45">per cent</g> ($27 billion) in the same period of the previous year. The Reserve Bank and the government have maintained that the CAD level is comfortable, but the spike in gold imports may spark fresh worries. On November 28 last year, the RBI had scrapped the controversial 80:20 scheme. Under the programme, which was put in place in August 2013 to put a tight leash on gold inflows, at least 20 <g data-gr-id="46">per cent</g> of imported gold had to be exported before bringing in new lots.
Increasing gold import is one of the reasons for the widening trade deficit in April, which stood at $11 billion as against $10 billion in April 2014. India is the largest importer of gold, which mainly caters to the demand of the jewellery industry.