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Gold import surge pushes trade deficit up to $17.7 bn

India's exports grew for the fourth consecutive month recording a growth of 1.6 per cent in April but a surge in gold imports pushed up the trade deficit to $17.7 billion.

Gold and silver imports during the month under review have increased by 138 per cent to $ 7.5 billion from $3.1 billion in April 2012.

'Imports have seen an undue growth of 10.9 per cent (in April to $41.95 billion) largely contributed by significant increase in gold imports,' Commerce Secretary S R Rao told reporters here. Exports in April stood at $24.16 billion as against $23.7 billion in April, 2012.

Expressing concern over the ballooning trade deficit, Rao said that government would take steps to bridge the gap.

'Government sees this growing trade imbalance with concern and would be taking into stock this heavy import of gold and would come out with considered steps as how to contain this growing trade deficit,' he added.

After touching the second highest figure ever in a month in January to $20 billion, the trade gap came down to $14.9 billion in February and $10.3 billion in March. On the steps to discourage gold imports, Director General of Foreign Trade Anup Pujari said the government has imposed certain duty but the steep fall in prices have neutralised its impact.

'...gold imports have been so much, it is not an accepted thing. In fact all of us must have been taken it by surprise,' he added.

Besides, gold and silver, imports of crude oil; metals and scraps and chemicals grew by 4 per cent, 52 per cent and 23 per cent respectively.

After declining for consecutive eight months from May 2012, India's exports entered positive zone in January, 2013. Rao said the absence of alternative avenues of investment was also pushing demand for gold upwards.

'It is an inflation proof investment for a citizen. If economic growth picks up and better avenues for investment (appear), then the consumer behaviour shifts,' he said.

Pujari said during Akshaya Tritiya festival people buy more gold. Oil imports in April stood at $ 14 billion as against $13.5 billion in April 2012. Non-oil imports grew by 14.9 per cent to $ 27.86 billion during the period. On export growth, Rao said the shipments are showing continuous positive up-tick. Sectors which registered positive export growth include rice, gems and jewellery (22 per cent), ready made garments (8.6 per cent), cotton (8.1 per cent), tea (5.4 per cent) and marine products (25 per cent).

Sectors which registered negative growth include petroleum (0.5 per cent), engineering (8.6 per cent), chemicals (1.4 per cent), man made yarn (3.3 per cent) and pharmaceuticals  (1.6 per cent).

Rao said the positive growth trend is expected to continue in the coming months as new markets are performing.

'US is looking good. The economy is picking up but not so in Europe. Latin America, Africa and Far East nations are continue to do well,' he added.

He also said that the RBI's proposed steps to facilitate easy availability of credit to exporters, if accepted, will help in boosting exports.

'We do see a positive curve out of dollar-denominated credit being available to exporters,' he added.

The government has fixed a target of $325 billion for exports during the current fiscal. In 2012-13, the shipments declined 1.76 per cent to $300.6 billion.

In 2012-13, the country's trade deficit touched a record high level of $191 billion. Reacting on the overall trade data, AEPC chairman A Sakthivel said the figure reflects sign of revival in the US economy. FIEO President Rafeeque Ahmed, however, expressed concern over rising gold imports and said there is a need to evaluate the situation.
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