Exports see fifth straight fall; shrink to $23.7 b in Sept

Exports see fifth straight fall; shrink to $23.7 b in Sept

Current account deficit back in focus

Exports see fifth straight fall; shrink to $23.7 b in Sept

Weak overseas demand for Indian goods affected country’s exports, which fell for the fifth straight month, but the imports kept rising, translating into a trade gap of over $18 billion in September, the biggest in the past 11 months.

The official date released by the Ministry of Commerce and Industry said overseas shipment contracted 10.8 per cent to $23.7 billion. It, however, did not give an elaborate description of the sectors taking maximum hit on account of contraction in demand in the US and European markets.

The balooning cost of crude oil in the international market and the appreciation of rupee kept exerting pressure on import bill, which rose 5 per cent to $41.77 billion in the month under review.

 India’s crude oil purchases jumped 31 per cent, while the rupee depreciated over 16 per cent between July and October this year. India is a net importer of crude oil, purchasing over 80 per cent of its requirement from the global market.

Expressing concern over the falling exports, Chairman of the Apparel Export Promotion Council, A Sakthivel said, “The raising cost of fuel and inflation thereby is hurting the exports.  To reduce vulnerabilities to external shocks the government needs to build fiscal space, reduce short-term debt exposure and create buffers that allows the economy to react in a resilient manner.”

In a statement, he said, “The biggest worry is appreciation of rupee to the extent of 10 per cent and also the high cost of funds.” Analysts expressed concern over the rising trade deficit, which eventually translates into a higher current account deficit (CAD) and trigger a credit rating downgrade.

The export performance data comes just a day ahead of the S&P’s warning that India faces a one-in-three chance of credit rating downgrade in the next 24 months from its current rating of BBB-.