Exports continue to rise,up 57% in May

Bringing some cheer to the economy which is battling high inflation and a possible slowdown,exports surged a whopping 56.9 per cent to $25.9 billion in May.

Bringing some cheer to the economy which is battling high inflation and a possible slowdown,exports surged a whopping 56.9 per cent to $25.9 billion in May. But the countrys trade deficit touched its in over two and a half years at $14.9 billion in May as demand for oil,gold and capital goods soared leading to an over 50 per cent jump in imports.

Imports increased by 54 per cent to $40.9 billion in May,marking its highest growth rate in the last four years,as per data released by the commerce ministry on Friday.

On a cumulative basis,imports grew 33.3 per cent to $73.7 billion while exports rose by 45 per cent to $49.7 billion between April and May 2011 over a year ago. The trade deficit amounted to $ 23.9 billion in the two month period.

The import figures are on expected lines as oil prices were exceptionally high at the time. But the export data is particularly optimistic,especially as the industry was not considered to be in very good shape. It has helped offset the trade deficit to some extent as well, said NR Bhanumurthy,an economist at the National Institute of Public Finance and Policy.

This is a sign of robust scenario coupled with effective government initiative, Ramu S Deora,President,FIEO said.

While the 37.5 per cent growth in exports in the previous fiscal helped contain the current account deficit 2.6 per cent of the gross domestic product,soaring inflation and high interest rates are eating into expansion plans of India Inc,causing fears of an industrial slowdown.

Commerce secretary Rahul Khullar had earlier warned that the trade deficit could widen to as much as $ 150 billion in the current fiscal due to higher oil imports.

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Oil imports grew 18.57 per cent to $ 10.1 billion year on year,on the back of a record high global crude prices that touched over $110 a barrel. Non-oil imports also registered a a huge growth of 71 per cent to $ 30.7 billion during the period under review. The high non-oil imports shows that industrial activity had not completely closed down in May, Bhanumurty said.

During April-May 2011,imports of electronic goods increased by 61 per cent,chemicals 9.6 per cent,coal 19 per cent,transport equipment 32.7 per cent,ores and scraps 22 per cent and vegetable oil 35 per cent. But,fertilisers and iron and steel imports declined by 35 per cent and 13 per cent,respectively.

But the pace of exports in May 2011 was slower compared to April 2011.