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High commodity prices continue to weigh on trade deficit, estimate for FY23 at $90bn: Acuite
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IANS | 06 Jun, 2022
The expectation of the expansion of the current account deficit is not
just driven by elevated global commodity prices, but is also linked to
the unlocking of the economy reviving pent-up demand and improved
vaccination cover aiding an organic recovery in the economy, ratings and
research firm Acuite Ratings & Research said in a report.
Nevertheless,
there is considerable uncertainty in projecting trade and current
account deficit due to high volatility in commodity prices, which in the
current environment is taking cues from unpredictable geopolitical
events.
"Given, the relentless rise in commodity prices
particularly crude oil which has again risen to $120 per barrel, we
project current account deficit (CAD) to widen to more than $90 billion
(in FY23) from an estimated $47 billion in FY22," the report said.
India's
merchandise trade deficit widened to a record high level of $23.3
billion in May 2022 from a deficit of $20.1 billion in April, the report
said citing the Ministry of Commerce and Industry's preliminary data.
On
the other hand, imports increased slightly to $60.6 billion in May from
$60.3 billion in the previous month, given the rising crude oil bill.
Notably,
India's share of oil imports from Russia has increased from 2 per cent
to nearly 25 per cent since the onslaught of the geopolitical crisis,
with India taking advantage of competitive pricing with an aim to fulfil
its heavy oil needs, it said.
"On the exports front, the
moderation was driven by non-oil exports while oil exports eased a tad
in May-22. On a sectoral basis, commodities such as petroleum products,
electronic goods, chemicals, and engineering goods remained strong in
May-22."
The report further said that the evolving global
geopolitical dynamics, and policy support through targeted incentive
structures like the production-linked incentive schemes and strategic
trade partnerships (such as India-Australia trade agreement, and
India-UAE trade pact) would also continue to support exports, besides
the inorganic expansion via price effect.
That said, some normalisation in growth is likely in the coming quarters on deceleration in global demand, the report added.
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| Customs Exchange Rates |
| Currency |
Import |
Export |
US Dollar
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84.35
|
82.60 |
UK Pound
|
106.35
|
102.90 |
Euro
|
92.50
|
89.35 |
| Japanese
Yen |
55.05 |
53.40 |
| As on 12 Oct, 2024 |
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