During April to November, the import bill of gold increased by 61.4 percent, on the other hand the trade deficit increased by 7.5 percent.
Increased trade deficit due to rising gold imports
The attraction of Indians towards gold is well known, the situation is that India is among the top countries in the world in terms of demand for gold. is accomplished through And due to the high prices of gold, its effect is being seen on the trade deficit of the country.
Gold imports rise with improvement in demand
With the lightening effect of Kovid, the demand for gold in India has once again seen a spurt, due to which there has been an increase in imports as well. In the first 8 months of the current financial year i.e. during April to November, the value of imported gold was $ 33.23 billion. This figure is 170 percent more than the imported gold worth $ 12.30 billion during the same period of 2020-21. By value, this figure has been the highest since 2011-12. When gold worth $ 38.18 billion came to the country in the period from April to November. The effect of the increase in prices was also that the share of gold in the total imported goods of the country reached the highest level since 2015-16.
Trade deficit widens with increase in imports
On the one hand, the share of imported gold has increased in the country and on the other hand its direct effect has also been visible in the balance of trade. During April to November, the country’s trade deficit increased to a level of $ 122 billion. There has been an increase in both the import bill of gold and the trade deficit as compared to the year 2019-20 before the pandemic. During this period, the import bill of gold increased by 61.4 percent, while on the other hand the trade deficit increased by 7.5 percent. Crude oil and gold have the biggest impact on India’s trade deficit. In both the commodities, the country meets most of its requirement from abroad. With the recovery in the economy, there is an increase in demand for both, due to which there is pressure in the trade deficit.
Increased pressure from higher gold rates
The pressure of buying gold in the trade deficit has also been seen due to the rise in gold prices. If we look at the quantity of gold, there has been no sharp fluctuation in the demand for gold in the last 5 years except in 2020-21 due to the impact of Kovid. In pre-Corona 2019-20, 420 tonnes of gold arrived in the country during April to September, while in the same period of the current financial year this figure is at 445 tonnes. The special thing is that in the same period of 2018-19, this figure was 527 tonnes. However, there has been a sharp jump in prices in the recent past. From April 2013 to August 2019, gold remained below the level of $ 1500 per ounce, while from May 2020 the prices are continuously above $ 1700 per ounce. At the same time, in May-June 2021, prices had reached above $ 1800 per ounce.