New Delhi, Sept. 10: Trade deficit fell to a five-month low of $10.9 billion in August, aided by exports which jumped 12.97 per cent to $26.14 billion and a sharp fall in gold imports because of government restrictions.
Gold imports dipped to $650 million in August from $2.2 billion in July. Lower gold imports helped to reduce overall imports, which fell to $37.05 billion in August from $38.10 billion in July.
Commerce minister Anand Sharma said, “Gold imports have come down. Gold imports are coming down consistently, fall will not impact the jewellery sector.”
The government had increased the custom duties on gold, while the central bank had tightened rules to reduce speculative purchases by bullion dealers.
“Although gold imports may remain contained owing to existing restrictions, a seasonal pickup in demand and improved agriculture growth prospects suggest that there could be some upside. Moreover, the genuine gold demand for August, which got pushed forward, may push up gold imports in September,” Garima Kapoor, economist with Yes Bank, said in a research note.
Gold imports dipped to just 2.5 tonnes in August from 47.5 tonnes in July and 31.5 tonnes in June. Imports were much higher in May at 162 tonnes, while it was at 142.50 tonnes in April, according to official data.
Gold is the country’s most expensive non-essential import, accounting for 13.3 per cent of the total bill and helping to push the current account deficit to $88 billion, or a record 4.8 per cent of GDP (gross domestic product), in 2012-13.
Imports may again rise to around 30 tonnes in September as jewellers usually start building inventory to cater to the requirements during the festival and marriage seasons from October, bullion traders said.
While finance minister P. Chidambaram has said efforts would be made to contain gold imports to below 845 tonnes (shipped last year), World Gold Council has estimated that the imports could match China’s 1,000 tonnes during the fiscal.
Imports of gold and crude oil have fuelled the trade deficit, which has contributed to the widening current account deficit (CAD). The government proposes to bring down CAD to 3.8 per cent of GDP, or $70 billion, in the current fiscal.
“We are in a firm positive terrain with exports growing at double digits. Our imports are also down and we are closing the big gap in our trade account,’’ Sharma said.
However, Sharma said rupee depreciation might not be the reason behind a boost in exports. “About 45 per cent of exports have imported contents. I don’t think weak rupee has any impact on positive export results,” he said.
The minister said exports were picking up because demand was improving in both traditional and new markets. He said measures to promote exports are bearing fruit and hoped the good monsoon would help economic growth.
Exports during April-August increased 3.89 per cent to $124.46 billion over $119.77 billion in April-August 2012. Imports during the period grew 1.72 per cent to $197.79 billion compared with $194.44 billion in the same period of the previous fiscal.