India’s trade deficit widens 87.5% to record $192 billion

What is the News?

According to Government data, India’s trade deficit has increased by 87.5% to a record  $192 billion in 2021-22 from $102 billion in the previous financial year.

India’s Merchandise Trade Deficit

India’s Merchandise exports for 2021-22 were at a record high of $418 billion. Similarly, imports also increased by 43.18% to $610 billion, leaving a trade deficit of $192 billion. 

With this, India’s merchandise trade crossed the $1 trillion milestones in FY22.

Why has the trade deficit increased?

The trade deficit has increased primarily on account of the sharp increase in petroleum imports due to the surge in global crude oil prices.

Note: The trade deficit for non-oil non-gold-jewellery items stood at $55 billion in 2021-22 Hence, they account for only around one-quarter of the total merchandise trade deficit.

What are the concerns going forward?

The rising economic uncertainty amid the Russia-Ukraine conflict could deteriorate the trade deficit further and widen the current account deficit as international oil prices remain volatile. 

Besides, supply-side disruptions, including the rise in freight costs, could hurt exports.

Source: This post is based on the article “India’s trade deficit widens 87.5% to record $192 billion” published in Livemint on 5th April 2022.