Rising gold imports raises fresh concerns of current account deficit; Exports post weakest growth in seven months
New Delhi : Gold imports surged by over six-fold to USD 5.61 billion (over Rs 35,000 crore) in November primarily due to a spike in demand during the marriage and festival season, raising fresh concerns of widening current account deficit.
Imports of the precious metal stood at USD 835.83 million in the same month in 2013. Higher gold imports in November have pushed up trade deficit to one-and-a-half year high of USD 16.86 billion in November as against USD 9.57 billion in the same month last year, a jump of 76%.
According to data released by the Reserve Bank of India (RBI), exports during the month under review increased by 7.27 percent at $25.96 billion than the level of $24.20 billion during November 2013.
For the period of April-November 2014-15, exports grew by 5.02 percent at $215.75 billion from $205.36 billion. Imports at $42.82 billion grew by 26.79 percent in the month under review, from $33.37 billion imported in the same month of last year.
Both Reserve Bank and government have been saying that CAD levels are comfortable despite an upward trend, but the huge jump in gold imports may cause fresh worries to them. Besides, import curbs were eased on November 28 which could also lead to further rise in imports this month onwards.
Oil imports during November 2014 were valued at $11.71 billion, which was 9.7 percent lower than oil imports in the corresponding period last year at $12.97 billion.
This was primarily a result of softening of international crude prices that has fallen below $65 a barrel and the rupee appreciation against the US dollar.
Sequentially, gold imports have been on an upward trend since August when the inbound shipments rose to USD 2.03 billion from 1.81 billion in July.
Last week the Reserve Bank had said that the current account deficit (CAD) had widened to $10.1 billion or 2.1% of GDP in July-September. It cited higher trade deficit due to rising gold imports as the primary reason for the spike in CAD.
The current account deficit, which is the excess of foreign exchange outflows over inflows, touched a historic high of 4.8 per cent of GDP in 2012-13, mainly due to rising imports of petroleum products and gold.
However, it narrowed sharply to 1.7 per cent of GDP in the April-June quarter of this fiscal due to decline in gold imports.