In November 2024, India’s merchandise trade deficit expanded to an unprecedented $37.84 billion, primarily due to a significant increase in gold imports and a decline in exports influenced by falling crude oil prices.
This deficit surpassed economists’ projections of $23.9 billion and marked a substantial rise from October’s $27.14 billion deficit. Merchandise exports for November stood at $32.11 billion, a decrease from $39.2 billion in October, while imports rose to $69.95 billion from $66.34 billion.
A notable factor in this widening deficit was the surge in gold imports, which reached a record $14.8 billion—more than double October’s $7.13 billion. This increase is attributed to heightened gold consumption, investment demand, and rising global prices.
In response to the expanding trade deficit, the Reserve Bank of India (RBI) likely intervened to support the rupee, which had fallen to a record low of 84.92 per U.S. dollar. The RBI’s actions aimed to stabilize the currency amid concerns over the growing trade imbalance.
Additionally, government officials are re-examining the November gold import figures, suspecting a possible overestimation due to a double-counting error following recent methodological changes. Preliminary estimates suggest that gold imports may have been overstated by up to 50 tons, nearly 30% of the total imports for that month.
To address the trade deficit, India is focusing on boosting exports to 20 high-potential countries and promoting six manufacturing and six high-potential service sectors. The combined merchandise and services exports and imports were estimated at $67.79 billion and $87.63 billion, respectively, for November.
The situation underscores the challenges faced by India’s economy in balancing import demands with export performance, particularly in the context of volatile commodity prices and global economic conditions.
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