India’s exports grew at its fastest pace in five years by 4.7% to $274.65 billion during the financial year 2016-17, despite the demonetisation drive that slowed domestic economic activity since November.

In March, exports grew a whopping 27.6% to $29.23 billion after clocking a 17.5% jump in February, government data a showed on April 13 as shipment of petroleum products jumped 69% while engineering goods were up 47%.

Imports grew even faster at 45.3% to $39.67 billion in March as crude oil imports doubled while gold imports grew a eye-popping 329%.

Exports last grew at a brisk pace of 21.8% in 2011-12, but shipments were down in three out of four years till 2015-16.

Analysts point to statistical base effect and said such high growth cannot be sustained. “It is an outlier. Such exports growth is unlikely to sustain. We expect the current account deficit to widen to 1.3% of GDP in 2016-17,” said DK Joshi, chief economist of Crisil.

The scrapping of high value notes worth Rs 15.44 lakh crore in November last year hurt cash-dependent small firms, which contribute nearly 40% of exports.

A revival of growth in developed economies and surge in commodity prices in the second half of 2016-17, boosted Indian shipment even though the rupee was firm against the dollar.

Last month, Commerce Minister Nirmala Sitharaman told lawmakers in Parliament that the decline in exports has bottomed out and started showing an uptick.

Comparing month-on-month changes, she said “the position is definitely improving. The recovery is, now, consistent and steady.”

With imports growing faster than exports, the trade deficit widened to $10.44 billion in March from $4.4 billion a year ago.

During April-March, the exports were up 4.7% at $274.65 billion while imports fell 0.17% to $380.38 billion leaving a trade gap of $105.72 billion.

Exports have been shrinking since December 2014 to September 2016, due to weak global demand and slide in oil prices.

India’s exports reversed the negative trend in June 2016, when it grew 1.3% after remaining in the red for 18 months. However, shipments again fell 0.3% in August and 6.8% in July.

The Modi government is aiming at lifting India’s share in global exports to 5% by 2020, from just 1.6% now.

But rising protectionism in the US is threatening to keep exports subdued.

US President Donald Trump’s “America First” restrictive policies coupled with Britain’s surprise Brexit vote last year to leave the European Union has clouded the global trade outlook.

Faster exports growth raises chances of some industrial recovery even as domestic demand was crimped by the demonetisation.

India’s stats office estimated GDP growth at 7.1% for 2016-17, much slower than 7.9% in 2015-16.

Source: Hindustan Times