TRADE DEFICIT AT AN 8-MONTH LOW IN MAY

NEW DELHI: Robust growth in labour-intensive sectors such as gems and jewellery, engineering goods and readymade garments helped India’s exports grow 69.3% to $32.3 billion in May, while imports rose 73.6% to $38.6 billion over the low base a year ago, leading to a trade deficit of $6.3 billion. Meanwhile, state-wise curbs to contain the second wave hurt imports, leading to an eight-month low trade deficit, provisional data released by the commerce ministry on Tuesday showed. In April this year, exports and imports stood at $30.6 billion and $45.7 billion, respectively.

Exports of gems and jewellery were up by 79%, readymade garments by 114%, engineering goods grew 53% and petroleum products 227% in May. Non-petroleum, non-gems and jewellery exports grew 46.5%.

Aditi Nayar, chief economist, ICRA Ltd, said state-level restrictions shrunk imports of crude oil and gold, narrowing the merchandise trade deficit.

“After the huge inventory build-up in February-april, the lockdown led to a sharp slowdown in gold imports. We are cautiously optimistic that domestic demand is resilient, and that fuel demand will bounce back in June. Nevertheless, the current account balance may well revert to a muted, transient surplus in Q1, led by the drop in mobility and fuel demand,” she added.

Gold imports fell to $679 million in May from $6.2 billion in April. Similarly, crude petroleum imports fell to $9.5 billion during the month from $10.8 billion in April.

Mahesh Desai, chairman, Engineering Export Promotion Council of India, said the rising cost of key raw materials, especially steel, is an area of concern. “Efforts must be made to minimize the impact on trade and business. Plans should be in place to ensure goods movement, especially export consignments, are not affected by lockdowns, night curfews or any other restrictions imposed by states,” he said.