India’s trade deficit fell to an eight-month low in May 2021, due to limited domestic demand for gold and oil amid the second Covid-19 wave and lockdown-like restrictions in states, official data released on Wednesday showed.
On-year, the trade deficit widened, though it was much lower than in May 2019.However, the deficit was lowest since September 2020 when it was $2.7 billion.
India exported merchandise worth $32.21 billion in May 2021, 67% higher on a year-on-year basis and nearly 8% over May 2019’s pre-pandemic numbers.
The country’s merchandise trade deficit shrank to an eight-month low, as imports over the month amounted to $38.53 billion, 68.54% over May 2020 and 17.47% lower than May 2019.
Major sectors that saw a spurt in exports in May, compared to the pre-COVID times, included cereals, iron ore, cotton yarn and handloom products, jute, rice and ceramics. However, leather, tea, readymade garments, oil seeds, handicrafts and gems and jewellery, saw a significant dip over the same period.
Contraction in the trade deficit to $6.3 billion in May 2021 from $15.1 billion in April 2021 to the State wise restrictions that widened over May and curbed domestic demand for both gold and oil.
“A predominant 63% of the decline in the trade deficit in May 2021 relative to April 2021 was on account of the collapse in gold imports, with the balance led by a narrower oil deficit, led both by higher exports and lower imports