Note4Students
From UPSC perspective, the following things are important :
Prelims level: Trade surplus
Mains level: Paper 3- India's import and exports
India registered a trade surplus after almost two decades. But this is not the result of a sudden rise in India’s export. It is due to subdued import indicating the low demand.
What latest data indicate
- Data released by the commerce ministry indicate a contraction in exports observed over the past few months easing slowly.
- But the continuing contraction in import which indicates low demand is worrying.
- This is trend is leading to the growing gap between import and export.
India registered a trade surplus: what it indicates
- This growing gap led to India registering a trade surplus of nearly $800 million in June.
- This is the first time in almost two decades that the country has registered a trade surplus.
- But does this mean that India’s exports have grown drastically?
- No. It is a sign of collapse in domestic demand.
Merchandise exports growing trends
- India’s merchandise exports continue to witness an upward swing.
- The pace of contraction fell to 12.4 per cent in June, from 36.2 per cent in May and 60 per cent in April.
- Exports of items such as iron ore, drugs and pharmaceuticals, chemicals and various agricultural commodities saw an expansion in June.
What growing exports and falling import indicate
- An upswing in exports could be indicative of a faster recovery of India’s export partners.
- Restrictions on economic activities in some of these countries had eased earlier.
- Other reason could be the rush by Indian exporters to ship out orders to meet their seasonal deadlines.
- Imports continue to remain deep in negative territory.
- The contraction in non-oil exports has actually worsened with decline observed in both consumer and investment/industrial goods imports.
- Some movement is visible in imports of electronic goods.
- But the import of machinery and transport equipment has not moved significantly.
- Of the 30 main import items, only four registered mildly positive growth in June — this indicates the pace of the domestic slowdown.
Conclusion
Economic activities across the world will take time to return to normalcy, India’s exports will take time to reach pre-COVID levels. It seems that the chasm between exports and imports could persist, given the plateauing of the post-lockdown spurt in demand/production.
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