India's exports during the first half of the current fiscal year grew 10 per cent in US dollar terms as compared with 18 per cent in the corresponding period last year even as the current account of the balance of payments during April-June 2003 showed a deficit after remaining surplus consecutively for previous six quarters.

During the same period, imports rose faster by 21.4 per cent as against an increase of 9.2 per cent in the corresponding period last year, according to the mid-term review of the monetary and credit policy released on Monday.

Oil imports increased 6.3 per cent as compared to 12.6 per cent in the corresponding period of the previous year, it said adding that non-oil imports increased 28 per cent as against an increase of 7.8 per cent in the corresponding period last year.

As a result, the policy said, the overall trade deficit at $7.1 billion during April-September was higher than the deficit of $3.5 billion in the same period of last fiscal.

The higher trade deficit this year, in substantial part, reflected growth in import demand emanating from a pick-up in economic activity as reflected by the imports of higher capital goods, it said.

The current account showed a deficit during April-June period, it said, adding the trade deficit (on payment basis) of $5.9 billion was offset to a large extent by private transfers of $4.2 billion.

In addition, the RBI said there was significant increase of $6.4 billion in net capital inflows comprising mainly foreign investment ($2.8 billion), NRI deposits ($1.7 billion) and external loans ($1.2 billion).

As a result, the net accretion to foreign exchange reserves, including valuation change, amounted to $6.7 billion during the first quarter of 2003-04.