Trade numbers for December provided more cheer, suggesting the economy may not have been hit as hard by demonetisation as feared. Exports were up for a fourth month running, rising 5.7% in December to $23.8 billion, the highest level since March 2015.
Imports were up 0.46% to $34.25 billion, leaving a trade deficit of $10.4 billion. While exports had declined 14.75% in December 2015, implying a low base effect to the growth, 18 of the 30 export sectors registered growth in December 2016.
Non-oil, non-gold imports, seen as a measure of domestic demand and strength of the economy, rose 4.4%.
Experts said demonetisation impact is likely lower since most export orders for Christmas and New Year are placed much in advance.
Problems at the supply and procurement front could get reflected in the January and February exports data.
Gold imports fell 48% after the government demonetised high denomination currency in November, helping improve the trade deficit.China's exports shrank 6.1% in December and dived 7.7% in 2016.
Gems and jewellery, pharma and engineering goods posted strong growth. Higher imports are of coal, electrical & non-electrical machinery and chemicals, suggesting a pickup in industrial demand and not consumer demand.
Merchandise exports in April-December grew 0.75% while oil imports were 14.61% higher at $7.645 billion year-on-year. Services trade surplus narrowed to a five-month low of 20.8% as imports jumped 46.4% in November 2016.