Rising oil price is hurting many countries in the world. India is not an exception either. India is able to sustain the pressure of oil price because of good foreign exchange earning from IT and NRIs but Indian economy is suffering. Now, it seems that rising oil price is increasing India’s trade deficit. Times of India reported:
“India's current account deficit for the April-June quarter rose to $6.099 billion, compared with $3.6 billion in the corresponding quarter of the previous fiscal, says the Reserve Bank of India's data on balance of payments. This increase is largely driven by a 22.6% rise in invisible receipts, which include earnings from travel, business, professional services and remittances.
With India's imports outstripping the pace of export growth, India's trade deficit has widened to $18.5 billion in the April-June period of this fiscal, compared with $13.6 billion in the first quarter of the previous fiscal. High oil import costs continue to have a bearing on the deficit. The balance of payments for the first quarter has reported a surplus of $6.38 billion.”
This is ironic in the sense that just yesterday Indian government announced of 8.9% GDP in April-June Quarter of this year. So, you can see that GDP growth is not the only thing that Indian government should be focused about. Trade deficit is equally important too.
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