India’s Exports and Import data for March 2013 tell us a story in data:
With imports going up to 40 billion dollars in March, the deficit for March widened to $10.5bn, marginally higher than last year. Month to Month changes are not relevant because the number of days in a month are different, and there are seasonal impacts. (I am not seasonally adjusting this data – and don’t currently trust trade data seasonal adjustments)
The Trade Deficit came in at $138 billion, substantially lower than the previous two years, in dollar terms.
In rupees, however, we’ve seen the deficit go back to only 8.26 trillion (lakh cr) – this is lower than last year by 200,000 cr.
While markets rejoice (they don’t need a reason nowadays) we should note that the export numbers aren’t growing, and imports are increasing. While the deficit looks good at the end of the year, will it keep going down this way?
On another note: I’m note measuring this as a percentage of GDP; it makes sense to measure the total deficit (trade+services) as a percentage of GDP, which has to be financed by inflows (remittances + NRI + FII investment). We will get the services data for March in a couple months.