India’s merchandise trade deficit for November showed a significant decline, surprising economists and experts. The deficit stood at $20.5 billion, lower than the same month last year and considerably lower than the previous month of October. This unexpected improvement was largely due to a better-than-expected performance of exports, which amounted to $33.9 billion.
According to Aditi Nayar, chief economist at ICRA, this narrower deficit will likely continue over the coming months. She projected the monthly trade deficit to range between $820 billion and $825 billion for the remainder of the fiscal year. This would result in a current account deficit of approximately 2.5 per cent of GDP in Q3 FY2024 and 1.7 per cent of GDP in Q4 FY2024.
The positive growth in exports was experienced across various sectors. Half of the 20 key categories showed significant growth in November. This included iron ore, fruits and vegetables, meat, dairy and poultry products, oil meals, gems and jewellery, spices, coffee, and pharmaceuticals. However, engineering exports declined by 3 per cent, mainly due to the festival season in major engineering export belts of northern and western India.
On the services trade front, exports grew by 6.5 per cent to $28.6 billion year-on-year, while imports decreased by 12.9 per cent to $13.4 billion.
These figures indicate a positive shift in India’s trade scenario, with improving exports and a narrower merchandise trade deficit for November.
