Exports rise 2.44%; trade deficit narrows
16, Mar 2019
A marginal 2.44% increase in exports as well as lower imports of gold and petroleum products in February, significantly narrowed the country’s trade deficit to $9.6 billion – data released by the Commerce Ministry.
Gold import falls
While the import of gold fell by about 11% to $2.58 billion, as against $2.89 billion in the corresponding month last fiscal, inward shipments of petroleum products were down by nearly 8% to $9.37 billion.
Meanwhile, RBI said services exports in January 2019 were $17.75 billion, registering a negative growth of 1.02% over December 2018.
Current Account Deficit
- It means the value of imports of goods/services/investment incomes is greater than the value of Exports
- It is sometimes informally referred to as a trade deficit.
- The major contributor to India‘s Current Account Deficit (CAD) has been imports of Gold and Crude Oil
Impact of CAD
- Sustained period of CAD has led to currency depreciation, high rates of inflation which further effects the incoming foreign investment.
- Fall in gold imports and lower oil import bill in recent time led to shrinkage in the
- A current account surplus means an economy is exporting a greater value of goods and services than it is Importing
- There is no hard and fast rule about what will happen if a country has a current account surplus. It depends on the size of the current account and the reasons for the current account surplus
- In the case of India, slow growth in imports, reflecting the persisting weakness in the investment sentiment, is the prominent reason behind this.
- The current account was in surplus last in the January-March quarter in the year 2007