India’s merchandise trade deficit widened to a record high of $31.46 billion in October from $19.37 billion in September, according to the latest official data.
The country’s trade deficit in October 2022 stood at $26.31 billion.
A surge in imports buoyed by strong consumer spending ahead of the festival season is cited as the reason for the widening of the trade deficit.
A 12.3 percent jump in inbound shipments to a fresh high of $65.03 billion came as demand for most items, including gold, electronic items and crude oil increased ahead of Diwali.
That offset a 6.2 percent rise in exports to $33.57 billion, Bloomberg reported.
Stronger spending is helping boost manufacturing and services activity in the country seen growing at the fastest pace among major economies this year.
While trade growth is an indicator of economic recovery, rising imports also pressurise external finances in the world’s third-biggest consumer of crude oil.
India’s widening trade deficit will put pressure on the currency, which already fell to a record low recently.
A wider trade deficit also threatens to impact the current account deficit which widened more than expected in the June quarter.
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