{"id":194344,"date":"2022-07-06T14:37:45","date_gmt":"2022-07-06T09:07:45","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=194344"},"modified":"2022-07-06T14:37:45","modified_gmt":"2022-07-06T09:07:45","slug":"a-matter-of-import-on-spectre-of-wider-trade-and-current-account-deficits","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/a-matter-of-import-on-spectre-of-wider-trade-and-current-account-deficits\/","title":{"rendered":"A matter of import: On spectre of wider trade and current account deficits"},"content":{"rendered":"\n

Source<\/strong>: This post is based on the article \u201cA matter of import: On spectre of wider trade and current account deficits<\/strong>\u201d published in The Hindu<\/strong> on 5th Jul 22<\/strong>.<\/p>\n

Syllabus<\/strong>: GS3 – Indian Economy – Issues related to growth and development<\/p>\n

Relevance<\/strong>: Boosting India’s exports<\/p>\n

News<\/strong>: India\u2019s monthly merchandise trade deficit<\/strong> hit a fresh record of $25.6 billion in June, as per preliminary estimates released by the Commerce and Industry Ministry.<\/p>\n

This is the third occasion in seven months and the second month in a row that the trade deficit has widened to all-time highs.<\/p>\n

The trade deficit for Q1 adds up to a record $70.25 billion, over two times higher than a year ago.<\/p>\n

What is the situation wrt India’s exports and imports?<\/h5>\n

Exports<\/strong><\/span><\/p>\n

\n

Four of India\u2019s top 10 export items \u2014 engineering goods, cotton yarn, drugs and pharma and plastic products \u2014 contracted from a year ago.<\/p>\n

Petroleum exports were up 98% from June 2021, but about $0.7 billion lower than May 2022.<\/p>\n

Imports <\/strong><\/span><\/p>\n

Even as exports growth slid, imports surged<\/strong> by over 51% to $63.6 billion in June, crossing the $60 billion mark for the fourth month in a row.<\/p>\n

Coal imports, and petroleum inflows, drove nearly three-fourths of this surge.<\/p>\n

And although gold imports moderated from over $6 billion that month to $2.6 billion in June, they were still 169% higher than a year ago.<\/p>\n

What are the associated concerns?<\/h5>\n

The tangible slowdown in exports, due to weaker global demand, is unlikely to change much soon<\/strong>, with recessions or sharp growth slowdowns expected in several developed markets.<\/p>\n

Domestic demand for imports<\/strong> of oil, fertilizers, coal and even gold is largely inelastic, and elevated global prices for these will continue to escalate the import bill<\/strong> through this year.<\/p>\n

The weakening rupee will raise import costs<\/strong> further. Analysts expect the rupee to scale the 82 to a dollar mark by the October to December quarter before recovering.<\/p>\n

–<\/strong> Robust forex reserves notwithstanding, the persistent outflows of foreign capital from the financial markets have triggered concerns about the balance of payments situation. <\/strong><\/p>\n

The current account deficit is expected to more than double<\/strong> to around 3% of GDP this year from 1.2% in 2021-22.<\/p>\n

Coal imports, are further expected to keep hitting record highs<\/strong> as the monsoon will affect domestic output.<\/p>\n

Efforts by the govt<\/h5>\n

The Government has imposed a windfall tax on crude oil production<\/strong> that could help bridge concerns about the fiscal deficit.<\/p>\n

It also placed restrictions on petroleum products\u2019 exports<\/strong> and raised customs duties on gold imports<\/strong> to 15% from 10.75%.<\/p>\n

Policymakers must avoid missteps and domestic inefficiencies hurting exports must be reviewed urgently.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Source: This post is based on the article \u201cA matter of import: On spectre of wider trade and current account deficits\u201d published in The Hindu on 5th Jul 22. Syllabus: GS3 – Indian Economy – Issues related to growth and development Relevance: Boosting India’s exports News: India\u2019s monthly merchandise trade deficit hit a fresh record… Continue reading A matter of import: On spectre of wider trade and current account deficits<\/span><\/a><\/p>\n","protected":false},"author":10328,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[216,10498],"class_list":["post-194344","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-gs-paper-3","tag-the-hindu","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704893853},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/194344","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10328"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=194344"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/194344\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=194344"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=194344"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=194344"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}