• NOVEMBER 2, 1999

Export growth pushes trade deficit lower in September

Indian exports have registered a growth of 12% (YoY) during the month of September 1999 even as imports have recorded a slower growth of 7%. Consequently, the trade deficit during the month of September has reduced to US$ 0.87 bn as compared with US$ 0.93 bn in the corresponding period last year.

The trade figures reflect a pick up in export growth and this likely to come as a boost to the industrial sector. However, during the period April September 1999 non-oil imports have actually declined by 2%. This brings to light the fact that investment activity, a key factor of economic growth, is yet to pick up. A 53% surge in oil imports has compensated for this decline, and as a result overall imports for the half-year have shown a growth of 5.6%. The trade deficit during the period (US$ 5.01 bn) is similar to previous year levels (US$ 5.02 bn).

For a sustainable growth in economic activity, domestic investment activity must pick up. As Indian capital goods industry is not geared to meet the demands of a growing economy, in terms of volumes and technology, non-oil imports have historically consisted of a higher proportion of capital goods as compared to other non-oil imports.

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