Trade Deficit for Dec 2021 Comes in at Above $21 Billion

resr 5paisa Research Team

Last Updated: 8th August 2022 - 07:00 pm

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For the month of December 2021, the merchandise trade deficit came in at $21.68 billion. The deficit levels have sort of held above the $20 billion mark over the last few months, which has been a matter of worry as it has expanded the current account deficit. Let us talk about exports first.

For the month of December 2021, the merchandise exports were up 38.9% at $37.81 billion. Clearly, the exports are up sharply on a YoY basis. Even on a sequential basis, the exports are higher showing good momentum also.

The exports were essentially boosted by sectors like engineering, chemicals and textiles. 
Imports for the month of December 2021 were higher by 38.55% on YoY basis at $59.48 billion.

There was a strong growth in oil and gold imports on a YoY basis. It may be recollected that in the calendar year 2021, India had imported gold to the tune of $55 billion from other countries, largely on jewellery demand.

If you consider the first 9 months of fiscal 2021-22, then the cumulative exports stood at $301.88 billion and the exports are on target to scale the Piyush Goyal target of $400 billion for fiscal 2022. To that extent the Atma Nirbhar plan and the product linked incentives (PLI) schemes appear to be working to perfection.

Imports for the first nine months of the fiscal year 2021-22 stood at $443.82 billion implying a cumulative trade deficit of $142.44 billion. At the current run rate, the total imports should cross $600 billion for the full year and the total trade deficit looks all set to cross the $200 billion mark for the year.

What this means is that by the end of the current fiscal year, India may have just about 12-13 months of forex reserves cover for its imports, as against the long term average of 15-16 months in the last 4-5 years.

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