A surge in the country's oil import bill fueled by persistently rising global crude prices overshadowed robust increase in exports, as the government on Monday released trade data for April, the first month of the current fiscal year.
Exports grew 31.5 per cent in April, but a faster increase in imports — up 36.6 per cent —stoked fears that the country's finances could come under pressure from a widening trade deficit.
"The rise in crude oil prices is going to widen India’s trade deficit in 2008-09. That, in turn, would throw greater challenges at the export sector to maintain its growth momentum" said TK Bhaumik, a Delhi-based economist.
The trade deficit, the gap between the country's exports and imports, for April is estimated at $ 9.87 billion, up by over 40 per cent from $ 6.81 billion in same month a year ago, according to data from the Commerce Ministry.
Exports totaled $ 14.40 billion (Rs.57633 crore) in April against $ 24.27 billion in imports. The rise in imports were driven by global crude prices that soared the country's oil import bill by 46.2 per cent to $ 8.02 billion.
Billionaire investor T Boone Pickens has predicted that crude oil prices could hit $150 a barrel in the next six months, while investment firm Goldman Sachs raised its forecast for the average price of crude oil for the second half of 2008 to $141 a barrel. The basket of crude oil that Indian refiners buy has breached the worrisome $125 a barrel mark.
India, which imports about 70 per cent of its total crude oil requirement, faces the twin challenges of containing the import bill and maintaining retail fuel prices at reasonable levels to prevent political backlash in an election year.
Oil imports totaled $ 77 billion through the last fiscal year ended March.