Exports contract in September, WPI inflation up

 Indian exports contracted by 2.15 per cent in September for the first time since March this year, despite a narrower trade deficit.
Image used for representational purpose. (File photo | AP)
Image used for representational purpose. (File photo | AP)

NEW DELHI:  Indian exports contracted by 2.15 per cent in September for the first time since March this year, despite a narrower trade deficit. According to the Commerce Ministry, the contraction was primarily due to a high base witnessed during the month, last year. Separately, high oil prices and hardening food rates saw wholesale price inflation hitting a two-month high of 5.13 per cent during the month. 

However, trade data released by the ministry shows that despite the depreciation of the rupee, imports recorded the slowest growth in the last five months during September, at 10.45 per cent. Consequently, India’s trade deficit narrowed to $13.98 billion compared to $9.40 billion in September last year. 
Commenting on the contraction in exports, commerce secretary Anup Wadhawan said that it was a temporary phenomena. “In October, we will again see good growth in dollar terms,” he said. 

The ministry in its statement pointed out that the “decline is entirely due to the base effect resulting from September 2017 being an abnormally high growth month of about 26% in dollar terms due to the imminent cut off then for drawbacks at pre-GST rates”. It added that exporters’  realised incomes have gone up by almost 10 per cent. 

The month also saw major commodity groups showing positive export growthincluding petroleum products (26.8%), organic and inorganic chemicals (16.9%), drugs and pharmaceuticals (3.8%), cotton yarn, handloom products etc. (3.6%) and plastic and linoleum (28.2%). 

“Exports of non-petroleum and non-gems and jewellery during April-September, 2018 exhibited a positive growth of 17.51 per cent in rupee terms and 10.32 per cent in US$ terms over same period last year. Thus the growth is robust and not confined to petroleum products alone,” the ministry added. As for wholesale price inflation as measured by the Wholesale Price Index (WPI), hardening of food prices as well as rise in cost of petrol and diesel saw price rise hitting 5.13 per cent against 4.53 per cent in August, 2018, and 3.14 per cent in September last year.

Food articles saw prices deflate by 0.21 per cent during the month as against 4.04 per cent in August. Deflation in the vegetables basket was 3.83 per cent, compared to 20.18 per cent in the previous month, indicating a relative rise in prices. According to analysts like ICRA Principal Economist Aditi Nayar, while excise duty and VAT cuts would provide relief for fuel prices, a weak rupee would push up WPI inflation in the current month.

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