India's May trade deficit widened the most in nearly three years as the country's demand for oil, gold and industrial machinery soared, prompting concerns the gap for the fiscal year could expand despite a strong rebound in exports.
The trade deficit rose 67 percent in May from a month ago to $15 billion, the highest since September 2008. The trade gap widened despite a 57 percent year-on-year jump in exports, led by robust overseas sales of engineering goods, petroleum products and electronics.
"Exports are still growing," Trade Secretary Rahul Khullar told reporters on Friday. "The big change between the last couple of months and now is that imports have suddenly surged." The trade deficit could hit $145 billion-$150 billion in this fiscal year, he said, as global crude prices inflate the import bill of the world's fourth-largest oil importer. Later, Trade Minister Anand Sharma told reporters the trade deficit was a "matter of concern".
"It's very clear that it's because of the volatility in petroleum prices. Oil prices have sky-rocketed." The December-quarter current account gap stood at $9.7 billion compared with $12.2 billion a year earlier. Khullar had said earlier that he expects the 2010/11 current account deficit to be in the range of 2.5-2.8 percent of GDP.
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