DNA Money Edit: Widening trade deficit another worry

A surge in the import of crude oil and coal has jacked up India's trade gap in January, making it the widest since May 2013 when it crossed $19 billion. According to data released by the commerce ministry, the trade deficit--the gap between exports and imports--stood at $16.3 billion, 64.5% higher over a year ago, and higher than $14.88 billion in December.

Petroleum and crude oil imports have continued to inflate India's import bill, pushing up 26% from the year-ago month to $40.68 billion. Brent crude prices rallied 24.5% last month. Imports recorded a broad-based growth with an exception of gold, pulses and project goods, among others. The dip in gold imports was more than offset by higher imports of silver, pearls, precious and semi-precious stones.

In comparison, exports rose 9% to $24.4 billion as India continued to ship more engineering goods and chemicals. The marginal growth in exports of gems and jewellery and contraction in sectors such as textiles and yarn dampened the expansion of merchandise exports. The Reserve Bank of India (RBI) believes that the export growth would improve even as elevated commodity prices might drag the demand levels down.

With increase in trade deficit, the current account deficit (CAD) for 2017-18 is likely to go up marginally.