Oct exports drop 17.5% in 11th straight monthly fall

Contracting for the 11th month in a row, India’s merchandise exports fell 17.53 per cent in October to $21.35 billion, mainly due to a steep fall in shipments of petroleum products, iron ore and engineering, amid a broader demand slowdown. The imports too shrank an annual 21.15 per cent to $31.12 billion in October, narrowing the trade gap to $9.76 billion, from $13.57 billion in the same month last year.

Exports in October 2014 were valued at $25.89 billion. Gold imports during the month under review showed a sharp decline of 59.5 per cent at $1.70 billion. The cumulative exports during April-October this fiscal came down by 17.62 per cent to $154.29 billion as against $187.2 billion in the same period last year, according to data released by the Commerce Ministry.

The trade deficit during the first seven months of the current fiscal has shrunk to $77.76 billion as against $86.26 billion last fiscal. Oil and non-oil imports in October slid 45.31 per cent and 9.93 per cent to $6.84 billion and $24.2 billion, respectively.

On the export front, shipments of petroleum products tumbled 57 per cent to $2.46 billion while those of iron ore sharply declined by 85.53 per cent to $2.95 million. Engineering products were no exception, shipments of which took a knock of 11.65 per cent at $4.57 billion. In September, the 

country’s exports went down 24.33 per cent. 

Meanwhile, deflationary trend continued for the 12th month in a row with WPI inflation at (-)3.81 per cent in October, mainly on account of subdued prices of food items although pulses and onion turned costlier.

Inflation based on Wholesale Price Index has been in the negative zone since November last year. It was (-)4.54 per cent in September. In October last year, it was 1.66 per cent. Pulses and Onion among the food items category turned costlier with inflation at 52.98 per cent and 85.66 per cent respectively during October. Despite the sharp rise in prices of various pulses and the concerns generated by the unfavourable monsoon, overall food inflation remained muted in October, ICRA Senior Economist Aditi Nayar said. The rate of price rise in case of vegetables was at 2.56 per cent as against (-)19.37 per cent in the same month last year, as per official data released on Monday.

Besides pulses and onion, the food items which became dearer in October were milk (1.75 per cent) and wheat (4.68 per cent). However, inflation rate in case of potato was in the negative zone, (-)58.95 per cent. Inflation rate in fuel and power segment was (-)16.32 per cent, while that in manufactured products was (-)1.67 per cent in October.

The Reserve Bank would take into account WPI number for October while deciding on the key interest rate in its December 1 monetary policy review.

Most of the analysts feel that RBI is unlikely to cut the rate in its upcoming policy review. RBI mostly tracks the Consumer Price Index-based retail inflation for its monetary policy decisions.

Rising for the third straight month, retail inflation has climbed to 5 per cent in October, as against 4.62 per cent in the same month a year ago due to costlier pulses and other food items. Industry bodies said inflation may go up in the coming month due to rise in fuel prices and its impact on manufacturing. Further excise tax hike on petrol and diesel and cess imposition on services put together are likely to put an upward pressure on the November WPI, Assocham said. CII said however that inflation is likely to remain muted as commodity prices remain under pressure in the international market.

Assocham also said that action of global capital markets or emerging markets to the Fed hike will play a role in the upcoming RBI bi-monthly monetary policy. RBI Governor Raghuram Rajan had said earlier this month that the central bank is comfortable with the current rate of interest till further room is available.

In September, RBI had reduced interest rates by more than expected 0.50 per cent and said it expects CPI inflation to reach 5.8 per cent in January 2016. As per the official data, inflation for food articles group rose by 0.3 per cent on month-on-month basis due to higher price of urad (17 pc), arhar (12 pc), gram (7 pc), moong (6 pc), barley (3 pc), jowar, masur, pork and condiments & spices (2 pc each) and wheat, tea and bajra (1 pc each). However, the price of poultry chicken declined by 8 per cent), beef & buffalo meat and fish-marine (4 pc each), maize (2 pc) and coffee and fish-inland (1 pc each).

Inflation for August has been revised to (-)5.06 per cent, from the provisional estimate of (-)4.95 per cent.