India’s gold imports, which impact the country’s current account (CAD) deficit, increased by 6.4% to $12.9 billion between April and July this fiscal year due to healthy demand, according to government data.
Imports were $12 billion in the same period a year ago.
In July 2022, however, precious metal imports fell sharply by 43.6% to $2.4 billion, according to the latest data released by the Department of Commerce.
Rising gold and oil imports in the first four months of this fiscal year contributed to a record trade deficit of $30 billion, up from $10.63 billion in April-July 2021.
India is the second largest consumer of gold in the world after China. Imports mainly cover the demand of the jewelry industry.
Gemstone and jewelry exports in the first four months of the current fiscal year rose about 7% to $13.5 billion.
A wider trade gap in 2021-22 has widened the country’s current account deficit to 1.2% of GDP from a surplus of 0.9% in FY21, according to published Reserve Bank data. in June.
For the January-March 2022 quarter, the CAD tightened on a sequential basis to USD 13.4 billion or 1.5% of GDP from USD 22.2 billion or 2.6% of GDP in the October-December quarter 2021 .
Current account deficit occurs when the value of imported goods and services and other payments exceeds the value of exports of goods and services and other receipts by a country during a given period.
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