The Hindu Business Line : Rupee appreciation dents export growth sharply in June

Widening deficit
Exporters are exasperated by the lower value realisation for larger exports.
Trade deficit for the first quarter zoomed to $20.6 billion ($11.8 billion).

Our Bureau

New Delhi, Aug. 1 With rupee appreciation against dollar unrelenting, India’s first quarter export growth in the current fiscal decelerated to 7 per cent in rupee terms and in the month of June 2007, the latest available data, export growth was less than 1 per cent.

In dollar terms, the export growth during April-June 2007 was 18 per cent against the trend rate of above 20 per cent witnessed in the recent past.

Import Growth

Provisional figures of trade data show that with exports growth slowing down and import growth maintaining the high growth rate of 34 per cent, the trade deficit for the first quarter zoomed to $20.6 billion, against $11.8 billion in the corresponding period of 2006-07.

Officials in the Commerce Ministry told Business Line here that the high trade deficit on the back of a hefty import growth was not a matter of serious concern as the imported items broadly reflect intermediates, raw materials and o ther capital goods that help underpin the high industrial growth noticeable in the Indian economy in recent months.

They further said that the country’s high forex reserves, hovering over $200 billion, would help meet high import growth. However, they did concede that the persistent rupee appreciation against US dollar has dampened export drive and exporters are getting exasperated by the lower value realisation for larger exports.

India’s Exports

The country’s exports during June 2007 were valued at $11.9 billion, which was 14.05 per cent higher than the level of $10.4 billion during June 2006. In rupee terms, exports touched Rs 48,386.49 crore, which was 0.97 per cent higher than the value of exports during June 2006.

Cumulatively, India’s exports during April-June 2007 were $34.3 billion ($29.04 billion).

Import growth on the other hand has been continuing its increasing trend as imports in June 2006 amounted to $19.19 billion against $14.04 billion, reflecting an increase of 36.68 per cent over the level of imports during the corresponding month of 2005. Cumulative value of imports for April-June 2007 was $54.9 billion ($40.88 billion).

Oil imports during June 2007 amounted to $5.6 billion which was 9.85 per cent higher than such imports valued at $5.2 billion in the corresponding month of 2006. Oil imports during the first quarter of the current fiscal were 4.21 per cent higher valued at $14.8 billion ($14.2 billion).

Non-oil imports during June 2007 were 52.25 per cent higher valued at $13.5 billion ($8.9 billion). Cumulative value of non-oil imports were 50.36 per cent higher at $40 billion ($26.6 billion).

As a result of relatively lower export growth and a higher import growth, trade deficit during the first quarter of the current fiscal surged to $20.6 billion, which was substantially higher than the deficit of $11.8 billion during April-June 2006, according to a statement by the Department of Commerce here.

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