Merchandise trade deficit widened to a record-high of $31.46 billion in October, according to recent official data. With exports amounting to $33.57 billion and imports at $65.03 billion, trade deficit widened to $31.46 billion last month. Sharp rise in gold imports -- 95% higher on an annual basis -- during the festive session, and higher spending on oil contributed to this record-high merchandise trade deficit.

With services exports standing at $28.70 billion against imports at $14.32 billion, overall exports in October stood at 62.26 billion, showing a growth of 9.43 percent. Experts point out that this is a sign of recovery in the sector which is currently facing several major challenges in the form of weak demand in major markets, moderation in commodity prices and geopolitical tensions. Also, healthy services exports have helped to narrow the overall trade deficit. 

Meanwhile, fiscal deficit touched 39.3 percent of the full year target in the first half of the current financial year. With revenue receipt growing by almost 20 percent and impressive growth in capital spending in the first half, experts point out that the Centre's fiscal position is quite encouraging. The government may announce some new schemes in the run up to the elections, but the actual outgo will take time till such schemes become operational.

It is also encouraging that according to experts the record-high trade deficit in October is unlikely to affect the full-year current account deficit target, which is estimated at 1.3 percent to 2.0 percent of GDP. In the first quarter, CAD went up to $9.2 billion -- seven times higher than it had been in the previous quarter – mainly due to weak exports and higher trade deficit. The situation needs to be taken care of, however, to prevent it from deteriorating further.

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