Merchandise trade deficit has narrowed in Q1 of 2023-24 with contraction in imports exceeding contraction in exports, Reserve Bank of India (RBI) Governor Shaktikanta Das said during the third bi-monthly monetary policy for FY24 on Thursday.
“Services exports and remittances are, however, expected to provide cushion to the current account deficit. We, therefore, expect CAD to remain eminently manageable during the current financial year also,” he said.
“Merchandise exports and non-oil, non gold imports contracted further in June and the growth in services exports decelerated amid slowing external demand.”
India’s merchandise trade deficit narrowed to $20.13 billion in June, compared with $22.1 billion in May. The trade deficit contracted slightly as the decline in imports was more than the fall in exports.
Merchandise exports stood at $32.97 billion, while imports were $53.10 billion in June. Merchandise exports were $42.28 billion in June 2022. In the previous month, merchandise exports were $34.98 billion, while imports stood at $57.10 billion.
On the other hand, the estimated value of services export for June 2023 was $27.12 billion, as compared to $26.92 billion in June 2022.
India’s overall exports (merchandise and services combined) in June 2023 is estimated to be $60.09 billion, which is -13.16% over June 2022, according to PIB release in July.
Overall imports in June 2023 is estimated to be $68.98 billion, which is -13.91 % over June 2022. India’s overall exports (merchandise and services combined) in April-June 2023 is estimated to fall 7.29 per cent over April-June 2022. Overall imports in April-June 2023 is estimated to decline 10.18 per cent over April-June 2022, according to the report.
“The slowdown in the world economy and tepid demand in major advanced markets have significantly impacted the engineering exports sector, which has reflected in a sharp decline in shipments. Engineering exports from India conceded year-on-year decline for the seventh month in a row in June this year starting from December 2022. While the exporters are exploring new markets, the fiscal and monetary support remain crucial for the sector, which is key to generating jobs and earning forex,” said EEPC India Chairman Arun Kumar Garodia.
Meanwhile, the RBI in its monetary policy committee meeting unanimously decided to keep the repo rate unchanged at 6.5%.
RBI generally conducts six bi-monthly meetings in a financial year, where it decides interest rates, money supply, inflation outlook, and various macroeconomic indicators.