India's August Trade Gap Doubles

India's trade deficit almost doubled to a record in August as a surge in crude oil prices increased the nation's import bill and overseas sales of goods slowed.

The trade deficit widened to $13.9 billion from $7.2 billion a year earlier, the Ministry of Commerce and Industry said in a statement in New Delhi. Imports grew 51 percent, the fastest gain in seven months, to $29.9 billion, while exports expanded 27 percent to $16 billion.

A near doubling of oil prices has boosted import costs for South Asia's largest economy, which relies on overseas purchases for three-quarters of its energy needs. With refiners buying dollars to pay for crude, a weaker rupee may exacerbate an inflation rate near a 13-year high.

India paid an average $8 billion a month this year for oil imports, up from $5.5 billion in 2007, as crude oil costs surged to a record $147 a barrel on July 11. In India, the 35 percent drop in oil prices since July has been offset by the decline in the rupee to a five-year low.

The rupee fell 9.2 percent in the three months through September, its third quarterly loss and its biggest since March 1992. The rupee has declined almost 16 percent this year.

India's oil imports in August rose 77 percent to $10.9 billion as refiners paid more for crude oil purchased overseas. Non-oil imports gained 40 percent to $18.9 billion.

Imports in the five months ended August 31 rose 38 percent to $130.3 billion from $94.6 billion a year ago. That took the trade deficit to $49.2 billion, compared with $34.5 billion in the same period a year earlier, today's report showed.

The higher import bill widened the nation's current account deficit to $10.7 billion from $1.04 billion in the previous three months, the central bank said.

10/1/2008 5:42:12 AM