Despite Indian exports growing for the fourth consecutive months recording a growth of 1.6 per cent in April, a surge in gold import in has pushed up trade deficit to $17.7 billion and may worsen the current account deficit this fiscal compared to $14 billion in April 2012.
Exports in April stood at $24.16 billion as against $23.7 billion in April, 2012. Gold imports jumped by 138 per cent to $ 7.5 billion in April, the highest so far this year. In April 2012, Gold and silver imports stood at $3.1 billion.
“Imports has seen an undue growth of 10.9 per cent (in April to $ 41.95 billion) largely contributed by significant increase in gold imports,” said Commerce Secretary S R Rao.
Current Account Deficit (CAD), the difference between inflows and outflows of foreign currency, touched a historic high of 6.7 per cent of the GDP in quarter ending December.
The CAD in 2012-13 fiscal is expected to be around 5 per cent of the GDP.Gold and silver imports stood at $ 7.4 billion in January while in February and March it aggregated $5.7 billion and $ 3.3 billion respectively.
Apex exporters body Federation of Indian Export Organisations (FIEO) President Rafeeque Ahmed too expressed concern over surge in imports. “The rising gold imports is a cause of concern...There is a need to evaluate rising volume-wise gold imports,” Ahmed said.
On steps to discourage gold imports, Director General of Foreign Trade Anup Pujari said the Government has imposed certain duty but the steep fall in prices have neutralised its impact.
“...Gold imports have been so much, it is not an accepted thing. In fact all of us have been taken by surprise,” Pujari added. Rao said the absence of alternative avenues of investment was also pushing demand for gold upwards.
“It is an inflation proof investment for a citizen. If economic growth picks up and better avenues for investment (appear), then the consumer behaviour shifts,” he added. The ballooning CAD would put pressure on the country’s foreign exchange reserves.