India's trade deficit has surged to a whopping $185 billion for the financial year ended March 31, 2012 due to skyrocketing crude oil prices in the international market and this is expected to keep the rupee under pressure.
Releasing the provisional data, commerce and industry minister Anand Sharma said here on Friday said, "The large trade deficit is primarily because of crude oil prices.... It is beyond us to control or regulate the crude prices in the foreign market." India imports close to 80 per cent of its crude oil requirement leaving the country at the mercy of the global oil cartel.
The nation's crude oil bill touched the $150-billion mark while gold and silver imports were valued at $60 billion. "We are on course despite very difficult global scenario and the contraction of demand in the US and the Euro Zone crisis," the minister said.
Outbound shipments grew in new markets of Latin America and Africa offsetting to some extent the declining demand for Indian goods in the western countries. "Our current account deficit and trade deficit are a challenge. Both are under stress. Trade deficit is primarily because of high crude oil prices," he said. The trade deficit in 2010-11 was a more manageable $104.4 billion.
The high current account deficit will entail purchase of more dollars to finance imports, which is likely to further weaken the rupee. This in turn will make imports even more costlier. The rupee had fallen by nearly 16 per cent vis-a-vis the dollar in 2011 before recovering somewhat this year.
Sharma said that exports for 2011-2012 have exceeded $300 billion to surpass the 20 per cent growth target despite a slowdown in the US and Europe, which constitute the main markets for India.
However, imports have jumped by 38.2 per cent yearon-year to $485 billion during April-March. Apart from the crude bill, gold imports of nearly $59 billion have also helped widen the trade deficit. In 2010-11, Indian imports rose 21.6 per cent from a year earlier to $350.7 billion while exports grew 37.6 per cent on year to touch nearly $246 billion.
Meanwhile, services exports, which include the IT sector, grew by 1.8 per cent to $11.23 billion in February this fiscal over the previous month, the Reserve Bank said. Export of services were $11.02 billion in January. Total services exports during April-February now work out to $124.25 billion and will offset part of the huge trade deficit and reduce the burgeoning current account deficit.
Courtesy: Mail Today