Merchandise exports hit a record $35.5 billion in October, registering a 42.3 per cent rise from a year before and 35.2 per cent from the pre-Covid (same month in FY20) level. The exports were supported by strong order flow from key markets such as the US and China in the wake of an economic resurgence there and elevated global commodity prices.
But at $55.4 billion, imports surged at a faster pace of 62.5 per cent in October from a year before and 45.8 per cent from the pre-pandemic level. This kept trade deficit at an elevated level of $19.9 billion in October, although it was lower than the record $22.6 billion witnessed in September, according to the preliminary estimates released by the commerce ministry on Monday.
Of course, domestic demand has been improving in recent months after Covid-induced compression last fiscal. But import bill was greatly inflated by elevated global crude oil prices, which are hovering around 3-year highs, and massive purchases of gold in the build-up to the festival season.
Imports of petroleum products jumped over 141 per cent year-on-year to $14.4 billion, while gold purchases from overseas climbed 104 per cent to $5.1 billion ahead of Dhanteras. Coal imports surged 119 per cent and edible oil imports shot up by 60 per cent. Of course, base effect, too, remained unfavourable.
However, policy-makers may seek comfort in the fact that trade recovery has taken roots, with merchandise exports having exceeded the pre-pandemic level for eight months in a row. FE