India’s oil import bill continued to remain near record levels in January, and imports of non-oil items too gained pace, taking the trade deficit to the unhealthy $200 billion mark this year.
India’s oil bill rose 7 percent in January to $15.6 billion. The increase was 12.3% in rupee terms, as the value of the rupee has gone down in the year.
With total imports of $45.6 billion and exports of $25.6 billion, January saw one of the widest monthly trade deficit on record. Exports, overall, were flat year on year during the month. A rising trade deficit brings down the value of the rupee and makes imported items even costlier, and leads to price inflation in the domestic market. It can also lead to a crisis of payments.
India has already imported crude oil worth $140 billion in the first ten months of the financial year. The comparative figure for 2011-12 was $125.8 billion.
On the non-oil front, imports have actually declined by 5% so far this year to $266.4 billion.
However, the rising oil bill has pushed up India’s trade deficit by $12 billion to $167 billion. The figure is likely to hit the $200 billion mark for the full year. Last year, total trade deficit was $185 billion.
“We have serious concerns about this trend,” said Mr. D S Rawat, Secretary General of industry forum Assocham. “Deteriorating trade balance has been the main culprit behind pushing the current account deficit to unsustainable levels. The worrying factor is that the trade deficit is occurring on account of import of oil and gold rather than import of capital goods.”