The Hindu Business Line : Now, imports too in the negative

Trade matters
It is the first time in this fiscal that imports have declined.
The steep reduction in global crude prices resulted in a marked drop in imports to $4.5 b ($8.5 b) in January 2009.

G. Srinivasan

New Delhi, Feb. 6 Imports in January this year fell by 16 per cent over the same month the previous year, in line with the 22 per cent decline in exports during the month, provisional trade figures show.

Official sources privy to the quick estimates of foreign trade figures gathered by the DGCI&S told Business Line that January 2009 imports at $18.9 billion were 16.1 per cent lower than that of January 2008 imports, which cost $22.56 billion.

These provisional figures will be updated by the end of the month and the January 2009 foreign trade data will be officially released on March 1.

It is the first time in this fiscal that imports have declined and the overall import growth during the first 10 months from April 2008 to January 2009 at 25.9 per cent is still more than double the 11.9 per cent growth during the same period a year ago.

Trade deficit

With a provisional estimate of exports at $143 billion during April-January 2009 and imports amounting to $245 billion during the same period, the trade deficit crossed a record $100 billion in the first 10 months of the current fiscal to stand at $102 billion.

Trade policy analysts caution that India cannot have savings left for development activities if the zooming trade deficit and dwindling invisibles that help counterbalance the trade deficit in the wake of the global economic slowdown risk closing options for finding external financing.

Growth moderation

Moody.eco.com economist is on record that India’s import growth would moderate in the coming months in the wake of global slowdown despite the need for resource (raw material and intermediates) imports to undertake infrastructure works.

However, pearls, precious and semi-precious stones, newsprint, fertilisers, crude and manufactures, petroleum, crude and products and vegetable oil continue to crank up high import growth.

Even as export of gems and jewellery during April-January 2009 was down at $14.6 billion ($16.2 billion), import growth of pearls, precious and semi-precious did not slow down; their imports during the first 10 months of the current fiscal were 10.3 per cent higher at $7.9 billion ($7.2 billion).

However, import of gold and silver went down by 24 per cent in January 2009 at $615 million ($808 million), though their overall growth during the first 10 months of the current fiscal showed a modest 3.6 per cent at $15.7 billion ($15.2 billion).

The steep reduction in global crude prices resulted in a marked drop in import of petroleum, crude and products from a level of $8.5 billion in January 2008 to $4.48 billion in January 2009, a decline of close to 35 per cent, though such imports clocked a growth of 27.1 per cent for the the first 10 months of the current fiscal at $79.8 billion ($62.8 billion), thanks mainly to the spurt in global crude prices during most part of 2008.

Rupee factor

In rupee terms, despite the weakening of the rupee vis-À-vis the dollar by 20 per cent now than a year ago, the country’s appetite for import has not abated as import growth during the first 10 months of the current fiscal at Rs 10,95,984 crore was 39.7 per cent higher than the level of Rs 7,84,520 crore in the corresponding period the previous year.

However, there was deceleration in the traction of import growth in January 2009 to a modest 3.6 per cent at Rs 92,037 crore, against Rs 88,852 crore in January 2008.