The higher trade deficit is despite a sharp 25.5 per cent fall in oil imports, the single biggest import item, during the six-month period owing to low international oil prices. Non-oil imports, on the other hand, rose sharply by 19.1 per cent during the same period.

According to the Reserve Bank of India report on currency and finance, 1997-98, released on Monday, "The country's trade deficit in 1997-98 widened by $1.13 billion to $6.79 billion, reflecting a sharper deceleration in export growth last year. This year it looks set for a much higher deceleration," the Reserve Bank says.

During April-September 1998, India's exports at $16.27 billiondeclined by 3.3 per cent against an increase of 4.2 per cent during the comparable period last fiscal. On the other hand, imports during April-September 1998 at $21,26 billion increased by 10.1 per cent, which was higher than the increase of 7.6 per cent during the comparable period of the last fiscal.

According to the Reserve Bank report, the country's exports in SDR terms during April-September 1998 at SDR 12,125 million declined by 1.1 per cent over April-September 1997. During this period, India's imports at SDR 15,845 million increased by 12.6 per cent. Oil imports during April-September 1998 at SDR 2,171 million declined by 23.8 per cent, while the non-oil imports at SDR 13,674 million increased by 21.8 per cent. India's trade deficit during April-September 1998 rose to SDR 3,720 million from SDR 1,819 million during April-July 1997.

"The deceleration in India's exports during 1997-98 needs to be viewed in the context of the sluggishness in world trade during 1997. In US dollar terms, the growthrate of world exports decelerated from 19.7 per cent in 1995 to 4.8 per cent in 1996 and further to 3.5 per cent in 1997 and a similar trend continued during the first quarter of 1998," the RBI report says.

A sharp fall in the international prices of manufactured products for the second consecutive year during 1997 was the major factor behind the slower growth of world trade. The magnitude of the price decline was 3 per cent in 1996 and 8.2 per cent in 1997.

The south-east Asian crisis also had some adverse impact on India's exports, with the share of the crisis-affected countries, namely Indonesia, Philippines, the Republic of Korea, and Thailand, taken together, in India's aggregate exports declining to 4.2 per cent in 1997-98 from 5.2 per cent in 1996-97.