Trade gap widens to $12.6 billion on lacklustre exports
NEW DELHI: India’s merchandise exports growth slowed down steeply in February amid rising coronavirus cases in some parts of the country and delay in implementing a tax reimbursement scheme for exporters.
Data released by the commerce ministry showed exports grew 0.67% in February while imports grew 7% leading to a trade deficit of $12.6 billion during the month. Preliminary data released on March 2 had shown exports to have shrunk 0.25% in February.
In April-February, merchandise exports contracted 12.23% while merchandise imports fell 23.1% resulting in a $84.6 billion trade deficit in the first 11 months of FY21. In February, exports of petroleum products (-42%), gems and jewellery (-34%) and engineering goods (-8%) fell while shipments of pharma products rose by around 16%. Among major import items, petroleum (-16.6%) and transport equipment (-23%) fell, while import of gold (124%), electronic goods (38%) and chemicals (37.6%) shot up significantly.
The World Trade Organisation
last month said the decline in volume of world trade in 2020 may be “slightly less severe” than its recent forecast of 9.2% due to strong performance of trade in the fourth quarter while prospects for 2021 and beyond are uncertain as new variants of Covid-19 have appeared.
India’s merchandise trade had been weakening even before the pandemic hit the economy and external demand. Exports fell in 15 of the past 20 months starting June 2019. Since March 2020, exports and imports started declining in high double digits, even temporarily leading to a trade surplus in June for the first time in 18 years.
The Indian economy recovered in the December quarter to expand at 0.4% after two successive quarters of historic contraction induced by the coronavirus pandemic, signalling that Asia’s third-largest economy may be on the path of a slow but sustained recovery. For FY21, however, the government’s statistics office estimates a deeper contraction of 8% than the earlier estimate of 7.7% contraction. The Organisation for Economic Co-operation and Development projected Indian economy to bounce back to grow at 12.6% in FY22.