India's exports soared 36.4 percent in December, official data showed Tuesday, raising the chances of the country surpassing its overseas sales target for the current fiscal year. Merchandise exports climbed to $22.5 billion in December, up from $16.4 billion in the same month in 2009, according to preliminary data from the Ministry of Commerce.
The latest figures pushed exports from the start of the fiscal year in April to $164.7 billion, up nearly 30 percent from a year earlier. But while exports rose, imports slipped 11 percent to $25.1 billion, fanning concern about a slowdown in industrial activity as a result of an aggressive series of interest rate increases to tame inflation.
"The central bank's recent interest rate hikes have subdued demand for consumer goods and driven imports down sharply," said Matthew Circosta, an economist at Moody's Analytics. "The latest increase, in late January, moves policy settings into restrictive territory, potentially constraining growth in the year ahead," Circosta warned.
India last week hiked borrowing costs to their highest level since early 2008. The central bank has forecast India's economy will grow by at least 8.5 percent this fiscal year to March, up from a recently revised eight percent expansion the previous year.
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