July 03, 2007	Tuesday	Jamadi-us-Sani 17, 1428

NEW DELHI, July 2: India’s trade deficit grew by 45 per cent in May to $6.21 billion compared with last year as imports leapt thanks to a rapidly growing economy, according to data released on Monday.

The deficit, which was swelled by non-oil goods, was up from $4.26 billion in the same month in 2006.

Imports climbed by 26.4 per cent to $18.07 billion in May from a year earlier while exports jumped 18 per cent to $11.86 billion, data showed.

Imports have been climbing on the back of a fast-expanding economy.

India’s economy posted 9.4 per cent growth in the last financial year to March, the fastest pace in nearly two decades.

The trade deficit stood at $7.06 billion the previous month after rising from $3.80 billion in March, the Ministry of Commerce and Industry said export growth was slower in May compared to the 23.06 per cent year-on-year growth achieved last month.

“The export performance in May reflects execution of old orders by exporters. The rupee rise impact may be visible from July onward,” Commerce and Industry Minister Kamal Nath said.

The rupee has risen nearly nine per cent against the dollar so far this year as investors pump money into the South Asian economy.

Fuelled by fast economic growth, non-oil imports jumped by a strong 41.58 per cent to $13.33 billion in May compared with $9.42 billion in the same month last year.

Cumulatively for April-May in the current financial year to March 2008, exports increased by 20.37 per cent to $22.43 billion. Imports for this period climbed by 33.05 per cent to $35.71 billion.

The value of oil imports dropped by 2.99 per cent to $4.74 billion in May from $4.88 billion in the same month of the previous year.

“We expect the current account to worsen in full year 2008 due to the recent large appreciation in the rupee,” said brokerage Goldman Sachs in a research note.

“The rupee has appreciated by 8.8 per cent in the year to date, which is expected to widen the trade deficit significantly,” it said.

“The May trade data emphasises that trend,” it said.

“Outsized capital inflows will maintain pressure on the rupee to appreciate,” Rajeev Malik, senior economist at JP Morgan Chase in Singapore, added.

—AFP