India’s merchandise exports in August 45.17% higher than a year ago

Current GK ( Master) Financial System

02-Sep-21

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But trade deficit widens to four-month high driven by a sharp uptick in gold imports
India’s merchandise exports in August touched $33.14 billion, 45.17% higher than a year ago and 27.5% over the pre-pandemic level of August 2019, but the trade deficit widened to a four-month high driven by a sharp uptick in gold imports, as per preliminary estimates released on Thursday.
Merchandise imports during the month grew 51.47% year-on-year to $47 billion, which is also 18% higher than August 2019. The trade deficit widened 69.15% year-on-year to touch $13.87 billion but was just 0.07% higher than the pre-COVID level of 2019.
“With merchandise imports continuing to scale up, even as exports receded from their all-time high, the trade deficit came in higher than anticipated,” said Aditi Nayar, chief economist at rating agency ICRA, expressing concerns about rising gold imports.
In August 2020, gold imports stood at $3.7 billion, implying an 82.22% jump in imports of the yellow metal last month.
“Gold imports surged further to a five-month high of $6.7 billion in August 2021 and were responsible for 88% of the rise in the merchandise trade deficit relative to July 2021. Unless a weaker agricultural outlook restrains demand, gold imports may well touch $40 billion in 2021-22,” Ms. Nayar warned.? Exporters said the steady recovery in global trade was helping their order books but sought urgent attention from the government on the runaway freight rates, rampant container shortages and other policy constraints, including the release of pending benefits under earlier export incentive schemes.
“The government needs to provide freight support to all exports till March 31, 2022, as freight rates have skyrocketed,” said Dr. A. Sakthivel, president of the Federation of Indian Exporters’ Organisations.
Apart from augmenting the flow of empty containers to Indian ports, he suggested that the government should establish a regulatory authority to seek justification of freight hikes and imposition of various charges by shipping lines.