Economy

Trade deficit hits all time high of $184.9 b on soaring oil imports

Vishwanath Kulkarni New Delhi | Updated on March 12, 2018

A file photo of Mr M. Rafeeque Ahmed, President, FIEO.

tradedeficitgraph

Exports cross $300 billion target for 2011-12

India's trade deficit touched a record high at $184.9 billion for 2011-12 as imports outpaced exports by a huge margin. This higher-than-expected trade deficit is about 10.6 per cent of the GDP and is mainly on account of bloating oil imports.

Merchandise exports for the fiscal crossed the targeted $300 billion, despite a sluggish demand from key markets in crisis-hit European Union and the US. The overall exports were up 21 per cent in dollar terms to $303.7 billion as against previous year's $251.1 billion.

However, imports grew 32.15 per cent to $488.6 billion on rising oil and non-oil imports. Trade deficit or the gap between exports and imports during 2011-12 grew 56 per cent over previous year's $118.6 billion, according to Commerce Ministry data.

The high trade deficit is yet another cause of worry for the Indian economy, especially after the recent revision in outlook on long-term credit rating by Standard and Poor's.

“The growing trade deficit of $184.9 billion is a cause of concern,” said Mr M. Rafeeque Ahmed, President, Federation of Indian Export Organisations (FIEO).

However, looking at the profile of imports, very little manoeuvring is possible since the increasing trade deficit is on account of large imports of petroleum, gold, silver and coal besides machinery inputs, Mr Ahmed said in a statement.

Oil imports were up 47 per cent at $155.63 billion during 2011-12 over the previous year's $105.9 billion. The non-oil imports grew 26 per cent to $333 billion ($263.8 billion).

For March 2012, exports were six per cent lower at $28.6 billion ($30.4 billion). Imports during March grew 24 per cent to $42.5 billion ($34.2 billion). The oil imports during March rose 32.45 per cent to $15.83 billion over $11.95 billion in corresponding last year. The non-oil imports also went up by 20 per cent to $26.7 billion in March.

Mr Ahmed stressed that the deficit could be bridged with increasing exports as market and product diversification strategy has started yielding results.

The Government should provide necessary competitiveness to exports by providing lower rate of credit through re-introduction of interest subvention and rebate on State and local taxes.

The Government should also provide marketing support to micro and small enterprises through creation of an Export Development Fund, he said.

Published on May 01, 2012

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