India’s exports have been hampered by an uneven global recovery even as demand for oil and gold have stoked inward shipments. Reserve Bank of India Governor Duvvuri Subbarao said this week that the “external sector is very vulnerable,” adding the current-account gap may widen to a record in the year through March 2013 from about 4.2 percent of gross domestic product in the previous 12-month period.
“The worrying aspect is the widening trade deficit and petroleum imports are contributing to it,” Commerce Secretary S.R. Rao said at the trade briefing. “We are hopeful that exports will improve in the future.”
India’s current-account shortfall, the broadest measure of trade, widened to an unprecedented $22.31 billion in the quarter ended September 30.
The deficit has weighed on the rupee, which has weakened 8.6 percent against the dollar in the past year. The currency has climbed about 3 percent since mid-September, when Prime Minister Manmohan Singh began policy changes to bolster a faltering economy.
The rupee was little changed at 53.855 per dollar as of 12:34 p.m. in Mumbai. The BSE India Sensitive Index rose 0.6 percent. The yield on the 8.15 percent note maturing June 2022 fell to 7.84 percent from 7.87 percent yesterday.
The policy steps include an increase in the duty on gold and platinum imports to 6 percent from 4 percent last month. The nation is the world’s largest bullion buyer.
The government said in December that it will prolong an initiative providing subsidized credit to some exporters through the 12 months to March 2014 to support overseas sales.
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