The deficit stood at $ 1,290.02 million against $ 1,855.10 million in this period, going by the latest provisional foreign trade data released by the commerce ministry on Thursday.

While the export scenario is encouraging, the government is concerned at the growth in imports which indicates that the demand recession gripping the economy is still continuing.

The data shows that exports during April-May 1999 grew by 6.09 per cent to $ 5,301.25 million from $ 4,996.97 million. During May, exports clocked a growth of 11.68 per cent over the same month last year. In value terms, exports increased from $ 2,369.37 million to $ 2,646.12 million. In rupee terms, exports during April-May increased by more than 13.26 per cent over the previous corresponding period.

In rupee terms, exportsduring May were to the tune of Rs 11,317.77 crore, which was sharply up by 18.03 per cent over the corresponding month last year.

Oil imports during April-May are valued at dollar 1,252.66 million,which is 36.17 per cent higher than those in the previous corresponding period. The sharp increase has been occasioned by the rise in world crude prices. On the other hand, non-oil imports at dollar 5,338.61 million are down by 10 per cent from the 5,932.16 million in the corresponding period last year.

The commerce ministry has fixed an export growth target at 11 per cent for the 1999-2000 fiscal over the previous year, based on a study conducted by the Indian Institute of Foreign Trade.

What has influenced the ministry to fix the target are the encouraging developments in South East Asia, which had been hit by a currency meltdown last year and the pick up in demand in the European Union, one of India's major trading partners.

Reports reaching the ministry indicate that in most South East Asian countries,the negative import growth witnessed last year is turning to be positive. This has brightened up India's export prospects for the current fiscal.

India's exports registered a growth of only 3.7 per cent last fiscal due among other things to the above development in South East Asia. The trade deficit shot up to 8.24 billion.

This is the second time this calendar year that a double digit export growth rate had been posted on a month-on-month basis in May. In March, a 10.07 per cent export growth rate was recorded. But in April 1999, the growth rate slid to 2.09 per cent compared to same period the previous fiscal.

Commodities like gem and jewellery and cotton yarn have begun showing positive trend in exports, accounting for the good show in April and May. Exports during 1998-99 increased by 3.7 per cent mainly due to the excellent turnaround in growth rate since November.

During the first half of 1998-99, exports had witnessed a downtrend mainly in view of the recession in South-East Asia and otherparts of the world. For the current fiscal, government has set a 11 per cent target. Commerce minister Ramakrishna Hegde expressed hopes that the target can be achieved. However, Hegde said in Vishakapatnam recently that exports could be affected if the Kargil situation prolongs beyond August.