Economic growth has seen the deficit grow over the past few months. It stood at $5.78 billion in January, $5.68 billion in December 2006, and $6.20 billion in November.

“Given the rupee appreciation and higher interest costs, I expect exports to slowdown in the months ahead,” said Rajiv Kumar, economist at the Indian Council for Research in International Economic Relations.

The Reserve Bank of India (RBI) has raised its key lending rate by 125 basis points in five moves since early June last year, and the partially convertible rupee hit a nine-year high last month driven by strong capital inflows. Exports in March grew 8.84 per cent to $12.58 billion compared with $11.56 billion in the same month a year ago as the impact of a rising rupee hit exporters.

Imports in March rose 14.45 per cent to $16.38 billion compared with $14.31 billion in March 2006. Exports for the full year stood at $124.63 billion, up 21 percent compared with $103.06 billion in 2005-06, while imports rose 26.45 per cent at $181.37 billion compared with $143.43 billion in the year ago period.

Oil imports in 2006/07 stood at $57.27 billion, up 30.3 per cent compared with $43.95 billion in 2005/06. The country imports more than 70 percent of its oil needs and robust industrial growth has raised demands for fuel.

India is aiming at a 28 per cent growth in exports to $160 billion for the fiscal year to March 2008, commerce and industry Kamal Nath has said.