Indias trade deficit or the difference in theexports and imports, where the latter exceeds the former, is likely to narrowby 10% and reach $107 billion USD by the end of this year. The strong rushingof the export performance has saved India from a trade deficit. Due to thepickup in export figures in the recent past, the country is saved from theshortfall.
During the period of global recession, Indias exports declined up to 40%, but later during November, came to a positive track. Foreigntrade investments in India went up till 15% this February. Value of the exportitems picked up to exceed $16 billion USD in February, the highest figure inthe past one year. Still foreign trade is likely to fall short by 10%comparatively over the last year. Export figures for the whole year isanticipated to be around 35% making $168 billion which is approximately 10%lesser compared with the figures of the corresponding period during theprevious year. Despite the slight decline, it gives a positive feeling that India is able to surpass the trade deficit amidst the economic downturn.
Total FDI during 2009-10 was around $24.7billion. During the corresponding period in the previous year, the figures were$25.4 billion. Though a little less, this is a positive indication that Indianeconomy has remained in the same despite the global turmoil.
Industry analysts believe that Indias trade deficit is deteriorating though oil prices fell during the past monthscomparatively over the corresponding period during the previous year ofrecession. A data from the Reserve Bank states that the level of currentdeficit is 12 billion, whereas it was $11.7 billion during the correspondingperiod in the previous year. Rise in current account deficit weakens sentimentfor the rupee.
In response to the trade gap, IndianGovernment is monitoring Chinese reaction to its concerns. During the previousyear Indias exports to China was $11 billion, while China exported an excessof $27 billion to India. Indian Government will plan for more access in theChinese markets. Chinese companies show more interest in bidding forundertakings and infrastructure developments. Many projects are acquired bythem such as highways, metro, steel plants and power sector. Measures such asremoval of tariff, and non-tariff barriers restricting import of power plantequipments from India, and removal of import restrictions on rice, vegetables,and fruits are being considered.
A pick up at the end of 2010 is likely to makeup for the decline which happened during the year. New regulations regardingthe FDI are also expected to structure the global confidence in Indian economy.
Comments