Trade deficit balloons to record high in October

India's merchandise trade deficit widened to a record level in October owing to a near doubling of gold imports during the festive season, official data released on Wednesday showed. According to experts, higher goods trade deficit could in turn lead to a higher current account deficit and put pressure on the rupee.

- Rhik Kundu, Dhirendra Kumar

The goods trade deficit swelled to a higher-than-expected $31.46 billion last month as a 6.3% rise in exports was offset by a 12% rise in imports, showed data from the ministry of commerce and industry. The deficit was a higher than a Reuters poll of economists that had projected it at $20.5 billion.

Goods imports in October swelled to $65.03 billion as gold imports rose by 95% on an annual basis to $7.23 billion, Reuters reported, citing a commerce ministry official.

The huge rise in gold imports during October was due to the Diwali festival in November, a season when people usually purchase gold as it is considered auspicious. Last year, Diwali was celebrated in October.