Bikky Khosla | 13 Sep, 2022
India's exports registered 17.1
percent Y-o-Y growth to $192 billion during the April-August period, but
for the month of August overseas shipments contracted over 1 percent Y-o-Y to $33
billion while on a sequential basis the contraction at 9 percent was much sharper.
This data is discouraging, but what is more concerning is India’s widening
trade deficit, which increased to $28.68 billion in August 2022 from $11.71
billion in August 2021.
Experts point out to several factors responsible for
this widening trade deficit, including decreasing exports due to low global
demand in contrast to increasing domestic demand. Also, rupee depreciation,
exports restrictions on several items, global geopolitical
situations and high commodity prices, and delay in
execution of orders by buyers from developed countries due to slowdown fears, etc. No doubt, these concerns are worth considering.
High trade deficit may have cascading
effects on the economy. According to reports, India’s current account deficit
may rose to 5 percent of the GDP in the September quarter, driven by high trade
deficit, and this may in turn put pressure on capital account, thus negatively
affecting forex reserves, which in turn, may lead to further rupee
depreciation, pushing up inflation. So, India needs a way out of its widening
Boosting exports is the way to improve
the trade balance. No doubt, the Centre is doing a lot in this direction, but
more efforts are required. In this regard, an exporters’ body has suggested a
slew of measures including higher benefits under schemes like ECLGS, RoDTEP
and RoSCTL. It also calls for pushing container manufacturing and developing an
Indian Shipping Line of global repute. These suggestions sound reasonable.
I invite your opinions.